Mutual Funds — Lessons on Patience and Smartness2 min read
There are some investors who are hugely successful while there are some others who aren’t as successful. We may argue about what makes a good investor or what works or what doesn’t, but if we really look carefully, the answer isn’t hard to figure.
One important component that separates a successful investor from a not so successful one is patience which in turn translates to smartness.
You may not understand the significance of this attribute at first glance but its repercussions are felt massively in the longer term. Let’s take a look at how this quality makes a difference.
1. Markets May Go Crazy, You Need Not
Market downturns may happen every now and then, but that should not demotivate you from staying invested. Patience and composure may seem a difficult ask during such times, but with practice you can avoid impulsive decisions and save yourself from huge losses. Have a financial plan in place and focus on accomplishing your goals to develop a clear perspective and ward off anxiety.
2. Learn to Distinguish Noise From Information
While it’s a good practice to take advice from time to time, in financial matters you should not act on panic reactions. Before following any suggestions blindly, ensure that the concerned person holds the required expertise to offer the same. If required, seek the advice of SEBI registered professionals.
3. Invest Based on your Risk Profile
Mutual fund investments have risks attached to them. This requires you to be aware of the amount of risk that you can take and invest only in those funds that match your risk profile. Make sure that your mutual fund portfolio is well-diversified to lower the firm-related risks. Also, remember to rebalance your portfolio regularly to maintain the desired level of risk.
4. Embrace Disciplined and Committed Investing
Your mutual fund returns to a great extent depend on how regular and committed an investor you are. To invest in a consistent manner, choose the SIP mode of investment. Stay invested for a long term to boost returns and grow wealth. Also, don’t forget to step-up your SIPs as and when your income increases, to accumulate the desired amount of corpus to achieve your financial goals.
5. Choose Your Mutual Fund Wisely
You need to understand that each mutual fund is different from the other and is meant to achieve a unique goal. This makes it important for you to invest only in those funds which suit your financial goals. While choosing a mutual fund, look for consistent performance and not just intermittent returns.
Investing in mutual funds is an efficient way to accomplish your financial goals. It may seem difficult at first glance but with patience and intelligence, you can reap the maximum benefits out of your investments. To begin with, you can download the Paytm Money app today and can become investment-ready within minutes. You can also explore our investment packs which are tailored to suit your investment needs and risk profile.