3 resolutions to build an MF portfolio in ’14

As the New Year starts, there are some resolutions related to your mutual fund


investments that need to be made so that your portfolio remains strong. There are specific details that one must follow so that the mutual fund investments remain sound and hence, this is something that one must consider in their overall assessment of their investment options. Following these will help in achieving ones goals so here is a look at some of the points to see how an investor can make the most out of the position that they face.

Sustained investments is the way to go: Looking at the process of making an investment into mutual funds always ensures that there is a sustained process of investing. This is better than just making a one-time investment and then sitting back to see what happens. It is very difficult for any person to know when the time is appropriate in a particular investment and hence, it is always better if there are multiple investments that are taking place over a period of time. This would be very helpful if they are made in a systematic manner though over an extended period of time. The longer the time period of the investments, the better it is for the investor due to the fact that more opportunities will be present to get prices at different points during an economic cycle. This will ensure that there is a better chance of the investment earning returns at the end of the day.

Increase the amount over a period of time: Most people are fixated on the fact that they want to invest a certain sum of money for a specific time period. In this case, they fall into a trap whereby their planning loses a lot of value over a period of time. This is because they start off with a specific amount and then that figure does not change over a lot of years. If this is the condition then the planning or the investment is not taking care of the inflation effect or also for a situation that is changing for the individual at several points of time. One of the best ways to tackle this position is to ensure that over a period of time the total amount that is being invested is increasing at a specific rate so that there is an effect being given to the inflation that is being witnessed around us. The quantum of the increase has to be decided but if this is not done then it would be very difficult to ensure that the required goals are being achieved by the individual over a longer time frame.

Consider all kinds of exposure: Every investor has a favourite investment and this is especially true when it comes to mutual funds. Some investors prefer only equity-oriented funds, some invest only in fixed maturity plans, while some look only at gold funds. This is not in the best interest of the investor because everyone has several goals and for different ones there has to be a different mixture of funds that will do the trick. If one considers the type and the extent of the funds that are actually present in the country today then these are significant in number. Hence the resolution of the investor should be to look at all the opportunities that are present for them in an objective manner so that those that help in the process of achieving the goals can be selected. If there are multiple funds that are used then this could actually turn out to be better as it will help the individual in making good use of the opportunities available.

(The writer is a CA and certified financial planner)

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