Should You Invest in the Equity Mutual Funds Now?

If you have been avoiding equity Mutual Fund all these years, don’t plunge into the market or Equity Funds too enthusiastically. 

As the stock market surges to new highs, ordinary investors who missed a lot of the rise have been rushing to jump on board.  

It's easy to see why. Most people find it very hard to resist a crowd. it can seem like everybody is making easy money except you.

Is it too late to get in on the action? What's the best strategy if you're holding all your money in cash, money-market (Liquid Funds), FMP'S (certificates of deposit) or other "safe," stable and profitless investments? 

Here are seven steps to follow:

1. Don't get stampeded

"Be fearful when others are greedy, and greedy when others are fearful," advises Warren Buffett, the most successful investor in history. His meaning: The market is never so dangerous as when everyone else is optimistic and share prices have already risen a long way. Indeed, historically, you could have made money by investing in stocks when the public was selling, and selling only when the public was buying.

2. Have a plan

The stock market is inherently volatile. Even when it has generated superior returns it has done so unevenly, falling then rising again. Too many investors plunge into the market after a boom, only to sell again in panic when prices fall.

Shares or Equity Mutual Funds can prove a poor investment over one, two or even three years. Historically, the risks of investing in the market have declined the longer one invests. Strategists usually advise that you invest in stocks only with money you don't expect to need for four or five years.

3. Take it in stages

You can minimize the risk of investing all your money at the peak by doing it slowly and in stages. A simple strategy is to invest an equal amount of money every month, or every three months, taking at least a year to commit all your funds. 

If share prices go up during that time, you'll have the psychological cushion of some paper profits to show for your initial investments as you commit more money. If share prices go down, on the other hand, you'll have the relief that you didn't commit too much money at higher prices. 

In simple words its rupee cost averaging.We Normally call it as SIP.

4. Keep your balance

It is a beginner's mistake to put too much money into the stocks or assets that have already risen the most. During a boom, that typically includes the most volatile assets, such as small-cap stocks and the stocks of companies hoping for the most growth. Those are the assets most vulnerable to a pullback.

Investors can reduce the dangers by committing in advance to a balanced portfolio that includes less-volatile assets, such as government bond funds OR Income funds, which offset high-volatility stocks.

5. Look for value

During every boom there are always some who lose sight of what a stock really is. They talk about "beta," "growth stories" and "blue sky valuations," forgetting that a stock is simply a claim on a company's future cash flows.

The less you pay for those cash flows, the better the deal. The more you pay, the worse the deal. Decades of research shows that those who invest by this principle earn superior returns with lower risk. Stocks that are cheap in relation to their net assets, per-share earnings and dividends have proved the best investments over time.

6. Look for quality

Stocks in the best-quality companies (those with the best balance sheets and most stable businesses) have proved better investments over time than the rest of the market, while also entailing lower risk.

They also are particularly good investments during stock-market downturns and recessions. I strongly believe to own funds instead of Stocks as stock picking will be done with professional approach.

Today, a variety of mutual funds focus on "high quality" stocks and few of them are my loved ones which are mention below

7. Go global

Focusing your investments too much on your home country's market is a common beginner's mistake. Professional money managers often go along with this in order to get along. But it has no justification in theory or practice.

You can lower your risk by investing in global stock funds rather than in the home country's giving yourself adequate exposure to developed overseas markets and so-called emerging markets.

I like following Funds for Investment in this situation:

 BIRLA SUNLIFE TOP 100 FUND & BIRLA SUNLIFE EQUITY FUND

 ICICI PRUDENTIAL TOP 100 FUND & ICICI PRUDENTIAL DYNAMIC FUND

 RELIANCE VISION FUND & RELIANCE GROWTH FUND

 FRANKLIN INDIA BLUECHIP FUND AND FRANKLIN INDIA FLEXICAP FUND

 DSP BLACKROCK EQUITY FUND

 KOTAK 50 EQUITY

 UTI MASTER SHARE 

 TATA PURE EQUITY FUND

 CANARA ROBECO EQUITY DIVERSIFIED FUND


 JP MORGAN INDIA EQUITY FUND


I believe that long-term structural bullishness of the Indian markets remains unchanged.



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