One should invest in Mutual Funds to earn equity-linked returns (significantly higher than FD). This will also help you reach your financial goals faster.
How many Mutual Funds should one invest in?
You should select at least 4-5 funds that complement each other. Fund Managers like every competent investor choose a strategy, and hence, the one Fund will work best only in some market situations. So, when investing in stocks through Mutual Funds, you need to select a combination that will work better together, in the present and future.
Should I invest in mutual funds if I invest in direct stocks?
Yes, you should, in order to complement your investment strategy/style/biases and also be confident about committing a larger portion of your Investable Surplus to equities.
How to select the best Mutual Fund?
Finding a good Mutual Fund to invest in requires you to answer 3 essential questions:
1. What is the Right Fund? – Check quality of Holdings, consistency of returns, expense
2. What is the Right Time to buy? – Check portfolio valuation and fund manager investment strategy
3. What is the Right Allocation? – Check if the fund suits your risk profile
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