What Is The Right Time To Invest In Mutual Funds?

Mutual fund investments have been on the rise in recent decades and have gained popularity among investors. The option to invest in several mutual fund categories makes it possible for investors to pick their investments as per their specific risk profiles. Now, choosing from the different types of mutual funds such as equity funds, debt funds, or hybrid funds is not the only question that is raised. A lot of people wonder about the right time to invest in mutual funds.

The truth is that anyone can invest in mutual funds. Students, working professionals, or even retired citizens can opt for a mutual fund investment, which can help in improving their financial strength. There are no fixed criteria to pinpoint the best time to invest in mutual funds. However, there are certain things that one needs to keep in mind before they start investing.

Let’s take a look at a few tips that can help someone who is beginning their investment journey:

  1. Avoid stalling on investing

When an individual is stalling on investing, they are also stalling on the creation of their wealth. By delaying their investment, they are reducing the power of compounding as the investment term decreases. For instance, let’s say that an individual starts a SIP (Systematic Investment Plan) of Rs 2,000 per month at the age of 30 years. Considering the assumed rate of return is 12%, this investor will have an estimated total wealth creation of Rs 70, 59,827 after investing an amount of Rs 7,20,000 by the time they reach the retirement age of 60 years. This sets the total wealth gained at Rs 63,39,828. If the same investor would have started investing the same amount at the age of 40 years, their estimated wealth creation would be Rs 19,98,295 when they turn 60 years of age. The total amount they would end up investing would be 4,80,000. This means that the wealth that they gained is Rs 15,18,296. Looking at both scenarios, it is advisable to start investing as soon as possible to earn higher returns.

  1. Stay focused and maintain discipline

Investing in mutual funds requires a lot of discipline and patience. The market can be very volatile over a short-term period, and hence the returns that are generated are in a broader range. Over a longer period, market volatility tends to subside, and the returns are generally within a narrow range. Individuals that are investing in equity funds need to be patient with their investments to grow wealth.

  1. Make investments on a regular basis

For an individual that is new to mutual fund investment, it is advisable to play it safe and invest via SIPs. This way, they can reduce the risk factor by investing fixed amounts at regular intervals. By doing this, their investments are not going to be affected by market conditions. When the market is down, the investor will buy more units and when it goes up, they will buy fewer units. This is why investing in a SIP is considered to be a safe move.

Instead of simply waiting around for an ideal time to start investing, it is advisable to start as soon as possible. Make sure to consider factors such as the market positioning, your risk appetite, as well as the return on investment. Investors can also seek the guidance of mutual fund managers, as their experience can help in maximizing returns.