Though some people keep wondering, which is the right time to effectively plan for an investment in mutual funds; however, to be honest, anytime is the Best time to invest for the same.Investors should keep in mind that, irrespective of the fact that the condition of the stock market might be good or bad, or it might go through a period of recession at any point of time, an investment made for a long term benefit through mutual funds can never affect their returns.
Unlike individual stocks, MFs can be started at just any point of time. On the contrary, individual stocks should first be analyzed thoroughly before investing. Also, investments for individual stocks should be done only after the undervaluation of the stock.
In case of mutual funds, however, you can just get started! All you need to do is, looking for the plans that would prove to be the best performing in the long run (i.e., a given period of time), and finally, just go ahead to achieve your desired goal.
However, it is always advisable that you abide by the ‘sooner the better’ theory, since the earlier you begin with your MF investments, the earlier your plans mature.Say, for instance, if you begin investing an amount of Rs. 1,555 per month from the age of 25, with a yearly return of 12%, you will receive around Rs. 1 croreby the time you are 60 years old. Similarly, if you begin at age 30, you need to make a monthly investment of Rs. 2,861, whereas, if you start at 35, the sum of money to invest per month will be Rs. 5,322. You must also remember that, with age, you need to meet up with increased family responsibilities or health concerns that might chip away the investible surplus.
Hence, the type of MF you should go for, depends on your risk tolerance factors, as also your goals of life. This means, if your aim is to buy a large bungalow located in a posh area in your city, or a BMW car in 5 years, you should opt for hybrid MFs or debt MFs. But, if you bear an intention in your mind to save for your child’s higher studies in the US, you might want to go for growth mutual funds.
To be precise, if you would follow just these few simple rules, you are sure to make excellent returns through the choice of your mutual funds, even if the stock market shows the bear next month.