Be Rational and Increase your Mutual Fund Returns
Be rational and increase your Mutual Fund returns
Many a times emotions take a ride over rationality in life, but this should not be while investing in mutual funds. Any retail investor would feel happy while they see growth in their investments but anxious if the prices decline and start selling their units fully or partially. Instead of getting emotional smart investors would take logical decisions and they advantage of lower prices and add more funds to their portfolio and increase their returns.
The decisions made based on the information should be avoided rather it needs to be on the basis of data your mutual fund distributor would be able to help you with facts and analysis. Investments needs to be viewed on long term basis while investing in stock market.
Ways to apply rational approach
Avoid investing based on speculation:
An in-depth analysis and research on the fundamentals need to be done on the fund, management, industry trends and the competitive landscape before investing in mutual fund.
Analyse the fundamentals:
Before investing in a mutual fund, conducting thorough research and analysis of its fund, management, industry trends, and the competitive landscape is essential. This helps to make an informed decision based on facts and not just speculation.
Plan review and Prosper:
Before investing prepare an investment plan that are aligned with financial goals that comprises portfolio diversification, realistic expectations, monitoring and reviewing and re balancing.
Avoid herd mentality:
Do your own research and analysis and make decisions, avoid getting carried away by opinions of the masses that has no basis of facts and also from motivated propaganda. Financial research and analysis are complex in nature and it requires a good amount of knowledge, expertise and time consuming.
Manage risk:Diversifying portfolio across different sectors, and asset classes. They should also have a risk management plan to mitigate the risk. By applying a rational approach to long-term investing in mutual funds, investors can make informed decisions based on facts and analysis, avoid emotional decision-making, and position themselves for long-term success.