5 Amazing Ways to Get Maximum Returns from Mutual Funds

Investing through SIP is considered to be the best option when it comes to investing in mutual funds. You can opt for the payment on a monthly basis. Even if you are opting for a small amount initially, you can get expect better yield from the same after a considerable period of time. Further experts are of the opinion that equity fund and the investment market is expected to reach new heights in recent times. As the stock market seems to be unpredictable, it is better to opt for investing in mutual funds. Read on to know more about the ways that can help you get better returns from some of the top performing mutual fund investments like HDFC mutual fund. 

1. Try to invest through SIP

Investing through SIP in a mutual fund is considered one of the best options on a monthly basis. When you make investments in a small amount every month, you can expect to get high returns from the same. You can create a large amount over a certain period of time. For instance, if you invest rupees 5,000 on a monthly basis in equity mutual fund through SIP, you can expect to get an increase of 12% in a span of 15 years. Therefore, you can get different returns in a different time span.    

2. Invest according to risk appetite

Investors should invest based on the level of risk. So, the high-risk investor should opt for equity funds, moderate appetite investors should invest in hybrid funds. Low-Risk investors should invest in debt funds. Even after this, the return that you get from the investment may vary year after year. Investment based on the risk style will help you know whether you can expect a high return from the investment or not.

3. Try to invest in different categories of funds

Depending on the market scenario, different fund structure such as large-cap, mid-cap or small-cap can yield you different returns over a different period of time. Therefore, it is better if you invest in different caps with a small amount that can give you better returns. Moreover, if you happen to invest in better firms, you can expect a higher rate of returns on the invested amount. But it is often seen that mid-cap funds may not yield you better returns on a yearly basis. But you can expect better results from mid-cap over a certain period of time.

4. Investment based on financial goal

One of the mistakes that most of the investors tend to make in case of a mutual fund is investing for the wrong fund. This might involve a lot of loss in the investment. Also, they misunderstand the terms and conditions of the investment as they have to hold the investment for a long time. Investors should not opt for investing just because they can get 100% return form the same. Along with this, they should consider whether the investment helps to meet their financial goals or not.  In the case of a market crash, the fund invested in a mutual fund can erode your capital. You have to make wise plans so that even after investing money in the mutual fund, you are able to save enough for other necessary expenses. You have to consider your pre-defined goals before you plan to invest in mutual funds. If your investment helps you meet the financial goal properly, investing through mutual funds proves to be a wise decision.

5. Use STP for mutual fund investment of large amounts  

If you are using STP for mutual fund investment and planning to invest a large amount, you should be careful before making the investment. It is often one of the big mistakes on investor's part to invest a large amount via equity funds. Though, it can be considered to be an effective strategy during market corrections. Whether the markets at its peak time or you are perplexed about the right direction, opt for lump amount to be invested via shirt term investment. In this, you can opt for a systematic transfer plan for equity fund investment. For doing SIP, you can transfer the fund from equity fund to debt fund. In this way, you can reduce the risk of investing with a large amount in the mutual fund.   

Is it possible to improve your finance with mutual fund investment?

There are certain considerations and risk factor involved when investing in mutual funds. Before you opt for the same, try to know about the risks involved. You have to consider proper financial planning before you opt for such investments. However, you can improve the condition of your finances by investing in mutual funds. In a mutual fund, you get the option to invest in different assets and generate a lump sum amount at the end over a certain period of time. By managing the risk factor well, try to get a portfolio with debt fund or equity fund. This way you can improve the returns from the investment and save tax. Below are mentioned some of the ways in which you can boost your finances via mutual fund investment. 

What are the benefits of diversification?

Without high-risk the appetite of investment, mutual fund investment is a good option through which you can invest by breaking the investments in small funds. In this case, you can invest in bonds, cash funds, and equities. These can reduce the risk of mutual fund investment. This is better as you are able to secure a part of the money invested even if the market falls. On a contrary note, when the market reaches a high peak, you can get better returns from equity funds.   

Tax efficiency

Apart from improving your financial condition, mutual funds can help reduce the tax burden on your income. Under certain regulation of mutual investment, it is possible to get higher tax reduction after you invest in equity-linked savings scheme or ELSS.

How can you expect different goals from different fund investment?

You may have different financial goals at a different stage of life. With proper investment in mutual funds, you can get higher returns both from short term and long term investments. To achieve your short term financial goals, it is better to invest in bonds. For long term goals, investment in equity and a balanced fund is a perfect choice. Other than this, there are some other benefits of mutual fund investment gave below.

·         Through SIP, you can invest even a low amount of rupees 500

·         The mutual fund investment, tracking and returns can be accessed via online

·         The mutual fund can be redeemed even within two to five days 

·         The money invested in the mutual fund is handled by experts, and the person can guide you with the right decision in mutual fund investment

However, investing in a mutual fund is better than fixed deposit policy. If you go through the returns of a fixed deposit, you can opt for debt mutual fund return.