Is It Advisable For A Newcomer To Invest In Mutual Funds Now?

For someone who is investing in a mutual fund for the first time, it is natural to ask whether this is the right time to invest. Mutual funds, unlike stocks, are considerably stable; their investment strategies are geared for returns as well as the safety of investments. Hence, any time is the right time to invest in a mutual fund.

People invest in mutual funds to fulfill their financial goals. Let’s take the example of mango fruit. Who doesn’t love the soft, juicy, and sweet taste of mango, but it takes 5-8 years for a mango tree to grow and bear fruits. Expecting a tree to bear fruit fast would not be healthy at all. The same analogy can be applied to investments as well. If you start investing now, you will begin to see the fruits of your labor within a few years. The more you delay, the more you will be farther from your goals. Someone who had invested a few years back would tell you that the best time to invest was 20 years ago, if you would have asked him 20 years ago, his reply would be the same. There is no such thing as the best time. The best time to invest is now.

The key to success in investing is diversification. The same principle can be applied to mutual funds. The mutual fund universe offers a variety of investment solutions. One can invest in the short term, long term, ensuring regular income, retirement planning, children’s education planning, etc. Mutual funds touch every sphere of our life. The idea of investing in a mutual fund is to meet life goals along with wealth creation. You can diversify the mutual fund holdings into equity funds, debt funds, and liquid funds in such a way that each investment helps you to fulfill your life goals.

Apart from this, India’s economy is all set to double its growth, from $2.7 trillion to $5 trillion, in the coming years. The Foreign Institutional Investors (FIIs) are bullish on India's story. One can only imagine the market levels a decade from now. Volatility is an investor’s best friend; it provides those rare opportunities when equities trade at a discount for a brief period before resuming its upward journey. After the recent fall in the market, the NAVs of the mutual funds are available at attractive prices.

While mutual funds do not deliver exponential profit like stocks, they do deliver decent returns while reducing the risk to a large extent. The volatility in stocks can be overwhelming, but this is not the case with mutual funds. If you are skeptical, you can invest in a staggered manner through SIP. Even a seasoned investor will agree that in the long term investing through SIP is risk-free. Investing through SIP spreads out the risk and delivers handsome returns in the longer period. A SIP also allows taking advantage of rupee cost averaging which is fundamental to successful investing.

Mutual funds help you to beat inflation. Fixed deposits, while safe cannot deliver inflation-beating returns, investing in stocks can not only beat inflation, but it can deliver extraordinary returns in the long term. The catch is that stocks are a double-edged sword; they can also wipe out investments. The best bet is mutual funds, not only they help you to beat inflation, but they also generate tax-free returns ensuring complete peace of mind.

To sum it up, there is no better time than today if you want to invest.