1. Selecting equity mtual funds for initiating SIPs is often a challenge for first-time investors, despite Sebi's logical recategorization of funds.
2. As MFs have the potential to beat inflation over the years, it is crucial to have the right attitude and understand risks involved.
3. They can, therefore, initially opt for hybrid funds which typically invest in safer debt instruments, with lesser equity component, to take them on a learning curve to realise their individual risk appetite.
4. This is essential because equity MFs can yield inflation-beating returns in the long term, but can also lose money very fast in the short term.
5. Thereafter, those who can take some risk can even opt for SIPs in top-rated pure diversified equity funds of suitable Sebi's categories or even in index funds.
6. However, make sure you put in only those sums that you can comfortably invest regularly for a long term of 5+ years, by earmarking them against specific needs and goals.
7. Also, make sure you follow some basic investing rules:-
a) Avoid investing large amounts at one go.
b) Avoid trying to time your SIP entry and exit.
c) Have realistic expectations of returns.
d) Be prepared to suffer losses initially.
e) Don’t succumb to emotions of fear and greed.
2. As MFs have the potential to beat inflation over the years, it is crucial to have the right attitude and understand risks involved.
3. They can, therefore, initially opt for hybrid funds which typically invest in safer debt instruments, with lesser equity component, to take them on a learning curve to realise their individual risk appetite.
4. This is essential because equity MFs can yield inflation-beating returns in the long term, but can also lose money very fast in the short term.
5. Thereafter, those who can take some risk can even opt for SIPs in top-rated pure diversified equity funds of suitable Sebi's categories or even in index funds.
6. However, make sure you put in only those sums that you can comfortably invest regularly for a long term of 5+ years, by earmarking them against specific needs and goals.
7. Also, make sure you follow some basic investing rules:-
a) Avoid investing large amounts at one go.
b) Avoid trying to time your SIP entry and exit.
c) Have realistic expectations of returns.
d) Be prepared to suffer losses initially.
e) Don’t succumb to emotions of fear and greed.