5 Mutual Fund Investment Strategies for Beginners

24 May 2023

Goal-based investing is a strategy in which you make investments in mutual funds that are made to help you reach your goals. Your objectives might be serious ones, like funding your child's education or buying a new house.

Strategy 1: Goal-based Investing

A Systematic Investment Plan (SIP) is a type of investment strategy in which you consistently make small contributions over time. A SIP has many benefits, including customization, rupee cost averaging, compounding returns, and a higher potential for return generation.

Strategy 2: Start Monthly SIP 

You could invest in a mutual fund with various sectors and industries rather than putting all of your money into one or a few stocks. Doing this will spread out your risk and lessen the possibility that all of your mutual funds will perform poorly during a market downturn.

Strategy 3: Diversification 

Always try to understand a company's business model before investing in it. Furthermore, if you do not understand the company's business model, it is best to avoid investing in the company entirely. Before investing in a mutual fund try to understand in which companies the fund is investing, the performance of the mutual fund manager, risk-to-reward ratios, etc.

Strategy 4: Research before Investing 

You can achieve automation by opening a SIP, investing in passive or index funds, investing in a ULIP, and using your bank's Electronic Clearance System (ECS) to automatically transfer funds to your investments.

Strategy 5: Automate your Investments 

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