How to invest in Mutual Funds and Create Wealth?

Mutual funds help reduce risk through diversification and earn inflation-beating returns.
Every fund provides one level of diversification as it is invested in 30 to 70 stocks. Fund Managers select their portfolio based on some process or strategy expecting to outperform their benchmark index. However, It is up to you and your advisor to select the ones that are right for you?
Invest in 3-4 Funds with Diverse Investment Strategies
Choose Quality-at-Reasonable-Price
Different investment strategies-Value, Quality, Momentum and Small Cap outperform under different market and economic situation. By investing in 3-4 funds with diverse strategies you ensure that some part of your portfolio is always performing. You will also be invested in a more diverse set of stocks than picking 3-4 best performing funds.
Invest in 'andar-se-strong' funds
Choose Quality-at-Reasonable-Price
Within a particular investment strategy you should select the fund that is stronger than others. To identify such funds, you need to stress-test them on two criteria - Portfolio Quality which helps us compare the risk in the portfolio & Consistent Performance (Rolling returns) which helps us compare how well the fund was managed for returns.
Invest when there is an attractive upside potential
Choose Quality-at-Reasonable-Price
Investing in top performing funds which have delivered great returns can be disappointing because they are likely to own stocks that are over-valued and the chances of correction are high. You need away to assess and compare funds on the likely future returns they could deliver. This is crucial when you need to invest lumpsum, not SIP. At the very least you would want to avoid funds that are may not even deliver FD like returns over the next 3 years.
Invest in funds that are different than your existing portfolio
Choose Quality-at-Reasonable-Price
When you invest in stocks directly, selecting a fund with a portfolio that is very similar is wasted opportunities and fees. If you are adding a new fund then again it is imperative to check how different is the portfolio vis-à-vis you existing 'see-through' portfolio. You can do this by checking the percentage active shares between the two portfolios. Higher % active share implies the new fund is substantially different and hence will diversify your portfolio.

How to invest in Mutual Funds and Create Wealth?

Mutual funds help reduce risk through diversification and earn inflation-beating returns. Every fund provides one level of diversification as it is invested in 30 to 70 stocks. Fund Managers select their portfolio based on some process or strategy expecting to outperform their benchmark index. However, It is up to you and your advisor to select the ones that are right for you?

Invest in 3-4 Funds with Diverse Investment
Strategies

    Choose Quality-at-Reasonable-Price
    Different investment strategies-Value, Quality, Momentum and Small Cap outperform under different market and economic situation. By investing in 3-4 funds with diverse strategies you ensure that some part of your portfolio is always performing. You will also be invested in a more diverse set of stocks than picking 3-4 best performing funds.

Invest in 'andar-se-strong' funds

    Choose Quality-at-Reasonable-Price
    Within a particular investment strategy you should select the fund that is stronger than others. To identify such funds, you need to stress-test them on two criteria - Portfolio Quality which helps us compare the risk in the portfolio & Consistent Performance (Rolling returns) which helps us compare how well the fund was managed for returns.

Invest when there is an attractive upside potential

    Choose Quality-at-Reasonable-Price
    Investing in top performing funds which have delivered great returns can be disappointing because they are likely to own stocks that are over-valued and the chances of correction are high. You need away to assess and compare funds on the likely future returns they could deliver. This is crucial when you need to invest lumpsum, not SIP. At the very least you would want to avoid funds that are may not even deliver FD like returns over the next 3 years.

Invest in funds that are different than your existing portfolio

    Choose Quality-at-Reasonable-Price
    When you invest in stocks directly, selecting a fund with a portfolio that is very similar is wasted opportunities and fees. If you are adding a new fund then again it is imperative to check how different is the portfolio vis-à-vis you existing ‘see-through’ portfolio. You can do this by checking the percentage active shares between the two portfolios. Higher % active share implies the new fund is substantially different and hence will diversify your portfolio.
Importance of Future upside in Mutual Funds