A Lucrative Journey: My Mutual Fund Investment Story and Advice
As I take a stroll down the memory lane of my investing journey, it's fascinating to reflect on how my investments in mutual funds have evolved over the years. From the early days of sporadic and inconsistent investments to a disciplined approach, I've seen significant growth over the years. Starting in 2018 with an initial investment of 4,000 per month and ramping up to 15,000 per month recently, my current portfolio is valued generously due to my disciplined approach, particularly during the market downturns like the one caused by the Covid fall.
The Evolution of My Investments
For over two decades, I've dabbled in scrips and mutual funds, but the true “thing” began around 2007 when I started a Serious and systematic investment plan. Not sticking to any single fund, I've diversified my holdings over the years and, interestingly, I haven't pulled out any funds since 2007. However, every year, I've been increasing my SIP (Systematic Investment Plan) allocations, which has resulted in a compounded annual growth rate (CAGR) of over 20%.
Today, I firmly believe that my disciplined approach has paid off. I no longer fret over market movements, and instead, I focus on investing in actively managed equity funds. My investment philosophy is less about chasing the highest returns and more about designing a portfolio that allows my investments to work for me over time.
Key Investment Strategies
Anyone looking to invest in mutual funds should be familiar with the basics and some additional tips:
Investment Portfolio Composition
My current portfolio is diversified across various asset classes:
30% in Large-cap stock Index Funds 15% in Mid-cap stock funds 15% in Small-cap stock funds 25% in Foreign or Emerging Markets 15% in Intermediate-term Bond fundsWith an aggressive portfolio aiming for a 7-10% average rate of return, my investments have the potential to gain up to 40% in a good year and decline by up to 30% in a worse year.
Choosing the Right Mutual Fund
Here are some tips to guide your mutual fund investment:
Invest in Multiple Funds: Don't put all your eggs in one basket. Diversification is key. Start Small: Begin by investing a small amount to see how the funds perform. Research Online: Use financial websites like MoneyControl or Economic Times for detailed information on the funds. Choose Direct Plans: Opt for direct plans to save commissions that would otherwise be deducted from your investment. Track Your Investments: Use an app like Champ or MoneyControl to keep track of your entire portfolio.Why Timing Matters
A mutual fund investment is not solely about the amount you invest, but also the timing. This is because mutual funds are open-ended and fluctuate with the market. Therefore, the timing of your investment can have a significant impact on your returns. This is especially true for
Systematic Investment Plan (SIP)
You can choose to invest through a SIP or a one-time lump sum payment. SIPs offer the advantage of averaging out the cost of your investments, making regular, smaller investments more affordable. If you're unsure about how to set up your SIP online, there are numerous resources available online to guide you.
Conclusion
To recap, if you're looking to invest in mutual funds, start with a well-diversified portfolio and focus on long-term growth. With a strategic approach, you too can see significant returns over time. Remember, it's not about the immediate gains, but the consistent growth of your investment over the years.