Tips To Maximize Returns On Your Mutual Fund Investments

Advisor June 29, 2021

When it comes to investments, most of us prefer sticking to the traditional options – stocks, shares, gold, and property. But even though they prove beneficial in the long run, they come with several risks and price fluctuations. Mutual funds are different.

Unsplash | A convenient, low-risk, and high-return option, mutual funds are quickly becoming the preferred way to invest

Making for a convenient, low-risk, and high-return option, mutual funds are preferred by several individuals and investors as a steady investment vehicle. And if you’re smart about them, they can actually yield you much higher returns than some of the other basic techniques.

If you have a keen desire to invest in mutual funds and want to maximize your returns from them, we’re here to help you out! Here, we’ve compiled some of the best tips to enhance your mutual fund returns without much effort.

Tips to maximize mutual fund returns

Choose SIPs over lump-sum amounts

Unlike a one-time lump-sum investment, an SIP, or Systematic Investment Plan, allows you to invest any small amount irrespective of the market bottom. Lump-sum investments should be made when the market trends are moving upwards. But when markets are plunging, as opposed to other digital assets which might crash, investing in SIPs can prove a safe bet.

Direct plans are game-changers

Direct plans have the propensity to provide more returns as compared to regular plans. Investors can save on the brokerage money and use it elsewhere.

Diversification is the key

When you diversify your investments, the risk factor decreases. If one investment fails to give a good return, you have other options to fall back on. Depending upon the risk-taking capacity of the investor, he should invest in small-cap, mid-cap, and high-cap mutual funds.

Unsplash | Try to create a diversified portfolio to ensure minimum risks and maximum returns

Mistakes to avoid

Investing without understanding goals

Before you invest, have a plan, knowledge, and a goal to achieve. Investing only because a particular fund “sounds” good or because someone told you about it won’t lead to good returns. Seek advice from an experienced financial advisor before taking the first step. Avoid thinking of quick returns and stay clear of impulsive decisions.

Not starting early

It’s better to start investing early in your career. Compounding interest works well when you invest at an early age. And, of course, practice makes a man perfect! The more practice and experience you have in this field, the greater would be your future returns.

Remember that investing isn’t gambling

Avoid investing with the mindset of reaping short-term profits. People often rush to sell stocks when there’s even a hint of a slight profit. Often, they end up regretting their move when the prices increase more. So it’s good to have patience while you’re planning to invest.

Unsplash | Avoid investing with the mindset of reaping short-term profits. It’s good to have patience if you want good returns

To wrap it up

Mutual funds aren’t completely devoid of market risks, but if you have a proper plan and guidance, you can effortlessly master investing in them. Investing is not a DIY thing; it’s an art, and not everyone acknowledges it. These long-term wealth instruments make for great assets if handled properly.