In our day to day life we come across various advertisement related to mutual funds in newspapers, Television, internet, magazines and other medium. Every advertisement explain about the various benefits that one can avail by investing in mutual funds but no advertisement actually explains about the mistakes people make while investing their money in mutual funds. Let’s take a look on some of the common mistakes which people make:
Making investment in Mutual Funds without any financial plans:
Investing your hard earned money without any goal is just like participating in a race without a finish line. Setting goals is like creating a foundation for building. It is very important that one should take time and carefully plan about how to achieve the financial goals. Once the goal is set that accordingly people can allocate their money.
Investing in Mutual Funds without a Budget:
This is another very common mistake which almost all the novice people make while investing in mutual fund and that is not setting proper budget. For any kind of investment budget is the basic requirement, in simple words it’s like a fuel to a vehicle.
One should learn to establish a balance between the earning and investment. The moment this balance is disturbed the adverse effect starts reflecting in the investment as well. The best way is to list down all the small and big monthly investment, after that you can figure out the amount you can spend in mutual funds. Professionals call this practice ‘Cash flow plan’ because it keeps a record of all the cash inflow as well as outflow. The more you save today the more safe will be your future.
Making Investment without assessing the risk factor:
Making investment in any scheme without analyzing the risk factor is just like purchasing a garment without knowing the correct size. A simple thumb rule says that the money should you can keep for future and do not need for coming 5-10 years can be actually used for investing in mutual funds. As such no investment made in the market is risk free but it is also recommended that before investing in any scheme, one should take up the risk-profiling test. This test scientifically reveals the risk taking ability of any individual.
Investing without homework:
Investment market experience frequent fluctuations hence it is very important that one should do a bit of the homework before investing their hard-earned money. It is truly said that they should never do anything without proper homework and same goes well with Mutual Funds. After you have identified you goals, defined budget and analyzed the risk factor then the most important thing is to execute the planned things in proper sequence.
Making investment in Mutual Funds without any financial plans:
Investing your hard earned money without any goal is just like participating in a race without a finish line. Setting goals is like creating a foundation for building. It is very important that one should take time and carefully plan about how to achieve the financial goals. Once the goal is set that accordingly people can allocate their money.
Investing in Mutual Funds without a Budget:
This is another very common mistake which almost all the novice people make while investing in mutual fund and that is not setting proper budget. For any kind of investment budget is the basic requirement, in simple words it’s like a fuel to a vehicle.
One should learn to establish a balance between the earning and investment. The moment this balance is disturbed the adverse effect starts reflecting in the investment as well. The best way is to list down all the small and big monthly investment, after that you can figure out the amount you can spend in mutual funds. Professionals call this practice ‘Cash flow plan’ because it keeps a record of all the cash inflow as well as outflow. The more you save today the more safe will be your future.
Making Investment without assessing the risk factor:
Making investment in any scheme without analyzing the risk factor is just like purchasing a garment without knowing the correct size. A simple thumb rule says that the money should you can keep for future and do not need for coming 5-10 years can be actually used for investing in mutual funds. As such no investment made in the market is risk free but it is also recommended that before investing in any scheme, one should take up the risk-profiling test. This test scientifically reveals the risk taking ability of any individual.
Investing without homework:
Investment market experience frequent fluctuations hence it is very important that one should do a bit of the homework before investing their hard-earned money. It is truly said that they should never do anything without proper homework and same goes well with Mutual Funds. After you have identified you goals, defined budget and analyzed the risk factor then the most important thing is to execute the planned things in proper sequence.