Mutual Fund Trading Tips for Beginners [The Informative Guide]

Before discussing the different ways one can successfully invest in a mutual fund, it is mandatory to know and understand what mutual funds are. A pool of money accumulated from a large number of investors, professionally managed and regulated by SEBI, to yield higher returns are called mutual funds. Being regulated by SEBI, the investment is quite safe and secure.

Mutual Fund Trading Tips for Beginners

It is also the best possible way to escalate your wealth if proceeded in the right matter. Here are a few tips that may come in handy for  beginners who are willing to step into the world of mutual funds confidently:

Proper planning

Before you step into the whole process of investing and figuring the type of funds you wish to invest in, chalk out a plan for yourself for a better understanding of what you are looking for.

Clarity about the fund you are investing in

There are a plethora of schemes that you may have to choose. Thus, a proper understanding and sound knowledge about the type of mutual fund that you are investing in is fundamental. Get a clear idea of it before you take a step ahead.

Past Performance

It is essential to have a clear picture of the past performance of the fund in which you are investing. Sensex can be a useful parameter to measure the fluctuations. It is also essential to get an idea about the returns of the fund.

Choosing the right index fund

A common mistake that mutual fund investors make is that they choose a low-cost index fund instead of a high-cost fund. You don’t want a negative effect on your return. If you are looking for a smarter approach, go for the high-cost actively managed fund.

The credibility of the team

Experience plays a significant role everywhere. The more the experience of the managers you are handing your money over to, more the reliance and dependability. So, do take note of the tenure of the members of the management team.

Avoid common mistakes

Often winning funds sell and the losing ones are held. Proper and sound judgment is vital when handling mutual funds. It is essential to be sensible about every step you take in this process.

Stay invested for a reasonable amount of time

If you are investing in an equity fund, make sure you do so for at least five years. It will ensure recovery from losses and also escalate your returns. However, a shorter time is advisable for money funds.

Fund Robbers

Fund robbers, such as inflation, income tax, and interest rates, need to be kept at bay. Choose a mutual fund that makes sure to guard you against fund robbers. The funds that protect you from these are called balanced funds. Funds With a low exit load are preferable.

These were a few points to get you started with investing in mutual funds with full confidence.

How to Repay a Debt on your Own?

In order to repay a debt, one needs to make an arrangement, and that has to be executed as planned. It is essential you’ll have to make every single vital adjustment to your financial plan so you don’t overspend. An emergency fund account has to be created and the amount has to be transferred to that account every now and then.

Make it your objective to make a checklist and mark an assignment of the rundown every day (or every week), contingent upon how rapidly you need to progress toward becoming debt free. On the off chance that you need to do this perfectly, you need to ensure that you know where you spend every penny.

repay a debt on your own

Always keep an expense sheet, when you can update the expenditure. Make a list of all the debts, the details of the creditor, amount of the Debt, and due date, etc. Always confirm the debts with a credit report. Keeping track of all these details will keep you alert and help you in working out with clearing the debts. Make sure that all the debts are paid off on time. Because if the payment is done after the due date, there would be another additional expense, the Late fee, which would be another burden. Also if you keep missing the due dates consistently, interest rates and finance charges will increase.

Always use a calendaring system on your computer or smartphone, enter your payments there and set reminders several days before your payment is due and also on the date it is due. Never miss a payment, but if you do, don’t wait until the next due date, make the payment as soon as you remember or otherwise it will be reported to the credit bureau.

repay a debt on your own

Don’t just create your list and forget about it. Refer to your debt list periodically, especially as you pay bills. Update your list every few months as the number of your debt changes.  Keep checking them regularly and make sure no amount is spent unnecessarily. Get your free yearly credit reports to check them for exactness and to distinguish all debts.

Having everything worked out before you are extremely the way to progress here. Besides, when you’ve worked it full scale, and it’s in that spot in highly contrasting, it may not appear as outlandish as it did previously. Make a rundown of the details of your debts name of leaser, loan cost, balance, etc. Paying high financing costs on existing loans makes your debt truly mount, and makes paying it off considerably more troublesome. In order to bring down the loan charges. This is what to do:

  • In view of your credit, you may meet all requirements for much better loan costs on Mastercards.
  • Open a free record with Credit.com and see what sort of low rate balance exchange Visas you can get.
  • Call your card guarantors to request lower rates on Visas.

Make a minimum payment, if you can’t pay the whole amount. This way, you can keep your debt from growing and your account will in good standing. Credit Card debts should be paid off first. This is the best kind of strategy as the other debt may not have an interest as higher as a credit card.

Also Read- 3 Stages of Retirement Planning for Entrepreneurs

See which costs can be removed from your financial plan. In the event that you eat out various times each week, check whether you can chop it down to just once per week. Mechanize your investment funds. Check whether your boss will give you a chance to contribute some portion of your check to a bank account. The perfect sum is 10% to 20%, however, in case you’re endeavoring to escape debt, this probably won’t be conceivable. Check whether you can begin with 5% every check.

In the event that you can’t mechanize your reserve funds from your check, have your investment funds computerized from your financial records every payday. That way, you don’t coincidentally spend this cash and you won’t miss it. On the off chance that you get a reward or a salary increase, check whether you can stand to contribute a portion of that cash to other accounts.

As you work this framework, remember that it is going to be difficult. Getting rid of the debt takes a lot of work, yet in the event that you really need to clear all of it, it should be your diligence that can get it going. Furthermore, don’t worry about the modifications you might make in your framework. There is never a fixed solution, it’s always tied in with changing your propensities and practices so you can accomplish your financial objectives.

Basic Types of Investment Strategies in 2019

Investing your money in any plan will fetch you long term benefits when you do it with a properly planned investment strategy. Good investment strategies can give an extra edge to your portfolio and increases your chances of success at a significant rate.

Types of Investment Strategies

Now before going for investment strategies you need to know the various types of investment strategies that are there. Let us understand them.

Value investing

This is an investing strategy which was popularized by Warren Buffet. The main principle of such type of strategy is to buy those stocks which are cheaper than they actually should be. Now it takes a lot of research and time to find out underpriced stocks. For this, you need to understand the fundamentals of the lying companies. One needs to be quite patient with this kind of strategy, and later they are rewarded with a good payoff.

Income investing

This is considered to be great when in terms of binding up your wealth over a significant amount of time. In this type of investing strategy, one buys the securities which are typically paid out returns on a regular period. Now for the fixed income securities, bonds are the best example. Other than that, there is ETFs, dividend-paying stocks, real estate investment trusts, mutual funds, etc. this provides a reliable income stream.

Growth investing

The main focus of this type of investment strategy is on capital appreciation. In this, the investors are continuously looking out for those companies that have above average growth from their revenues and their profit margins. Thus in the growth investing, one gets to invest into small smaller companies having good potential of growth and shows signs of an emerging market. This type of investment strategy is considered to be little risers than the above two mentioned.

Small cap investing

Now, this type of investment strategy is most suitable for those who won’t hesitate to take some risk in their portfolio. In this type of investment strategy, one has to purchase those stocks that are of the smaller companies and on top of it; those companies will have lower margins. Now the reason why the companies with small caps look appealing to the investors is that they can quickly go unnoticed. While those companies that have large capital stocks are often having high chances of getting inflated price. Now it is suggested that people who are experienced in the stocks investments should only go with this. This is because these are relatively more volatile and hard to be traded.

Socially responsible investing

In this type of investing strategy, there is a portfolio such that, the companies will maintain a universal friendliness while also keeping up with the competition side by side. Now in today’s trading market, a majority of the investors and the traders expect the companies to be able to maintain a social conscience.

Conclusion

Thus the above mentioned are the five different kinds of investments strategies that one can follow. One should choose them by an individuals’ capability and demands.

4 Pseudo-Investments Young People Will Soon Gravitate To

crypto

If you feel like you’ve seen a dozen articles about how millennials and the next generation beneath them don’t trust the stock market, it’s probably because you have. This is a very common topic of conversation in investing circles these days, and while there’s some data to suggest it’s an overblown point, the underlying idea still makes some sense. Wary of market corruption, tight on finances in general, and in many cases having seen their parents struggle through a recession, young people do often have a certain distrust for conventional styles of financial management and investment. It’s only natural that many in this category will seek alternatives to the markets, and we’ve certainly seen them doing so.

In the near future though there will be even more alternative investments made all the more readily available by technology. Most of them already exist even if we’ve yet to see them blow up as popular opportunities – and most of them at least appear to be fairly risky propositions. Nonetheless, there are some alternative pseudo-investments we would expect to see young people gravitating to more in the next few years.

1 – Cryptocurrency

By the time of this writing, a few months into 2019, it’s pretty much universally accepted that cryptocurrency investment is a hit-or-miss prospect. Some got wealthy in the 2017 boom; others lost quite a lot of money trying and failing to ride the wave. And since the resulting crash, cryptocurrency has been difficult to project and, all in all, weaker. However, its long-term potential still exists, and seemingly as a result a report just a few months ago indicated that millennials are sticking with cryptocurrency. Right or wrong, many young people with money to invest appear to trust cryptocurrency not as a sure thing, but as a means of alternative investment moving forward.

2 – Startup Equity

It may seem lazy to suggest that Shark Tank, the popular CNBC show, might influence investing philosophies. At least among its American audience, however, and among young people who don’t want to buy stocks, it may be doing just that. We’ve seen a steady rise in apps and online platforms designed to help average people buy into startup businesses and products, either in exchange for favorable deals or equity. It’s a small-scale, independent form of venture capital investment, and it appeals to a lot of young people, even if it tends to be a very risky proposition.

3 – Betting Markets

Many would scoff at the very idea of listing betting in a piece about investment. However, because betting sites have migrated into U.S. markets as a result of the lifting of a federal ban on sports betting, it’s something to consider. This will represent a new opportunity for Americans, and it stands to reason that a lot of young people who will be exposed to related sites and apps, and who often have close ties to sports, entertainment, and politics (all of which have betting listings), will start making bets. This should not be looked at as something that is as responsible or predictable as market investment, but this isn’t about what’s strategic so much as what’s likely. We’ll at least see some treat this like an alternative form of investment.

4 – eSports

This category is a little more uncertain, and can almost be tied to some degree to the idea of investing in startup equity. However you look at it, the eSports industry is booming, with lots of growth potential remaining. Some expect it to be as big, widespread, and lucrative as the “major” American sports in time, which indicates that getting in now, in one way or another, could pay off in a big way. There are lots of ways to make money in eSports, from hosting or streaming events, to buying into companies and teams, to gaming yourself. Between them, it’s a safe bet that young people are going to devise new investment opportunities and chase them enthusiastically. Whether or not it’s a good decision is an open question at this point.

Is Buying a Racehorse a Worthy Investment?

It is easy to understand the appeal of horse racing. The sense of euphoria as your runner steadily moves clear of the chasing pack can provide an unbeatable rush of excitement, while the majority of race-goers also enjoy the social aspect of attending events such as Royal Ascot and the Cheltenham Festival.

Racing does tend to have a reputation for attracting the elite, but it’s entirely possible for anyone to buy shares in a racehorse and this provides a fun way of keeping an interest in the sport. We take a look at the pros and cons of investing your finances in a thoroughbred.

race horse

Source: Catterick Racecourse via Twitter

Why Invest?

Anyone who invests in a racehorse should be aware that this isn’t an instant money-making scheme. Purchasing a thoroughbred or joining a syndicate is far from a get-rich-quick scheme and investors are unlikely to see any return for at least the first twelve months, but the possibility of reward often outweighs the risk and there is always the possibility of long-term profit.

Flat racing horses are usually sold after three years in the UK and can often be purchased by owners in Hong Kong or Abu Dhabi. If a horse has enjoyed relative success on the turf, it may change hands for a handsome profit and this will then be split between the syndicate. Petrushka was a high-profile example of a horse who made a handsome profit for its owners when the filly was sold for £3.5 million back in 2001 (albeit an extremely rare example).

The Ups and Downs of (Co)Ownership

Owning or co-owning a racehorse can also be tremendous fun and many investors enjoy the chance to follow their horse around the country and watch it in action. If you have the money to invest, it can be a great opportunity to experience life as a racehorse owner and that will allow you overall say on its future. This involves being responsible for key decisions, ideal for the investor who likes a certain degree of control in exchange for the money they put up.

But it also means following procedures and that includes those for naming a racehorse – there are countless rules to which you must adhere. A horse’s moniker is very important and can occasionally affect its odds, especially in races such as the Grand National. Oddschecker says Rock the Kasbah is among the most backed runners in this year’s ante-post betting, having attracted significant early money from fans of The Clash. Owning a racehorse will require far more responsibility than simply joining a syndicate, so it’s a decision which isn’t to be taken lightly.

Flat or National Hunt?

Flat horses are generally more expensive to purchase but they do race far more frequently and the rewards can often be far greater. Although jumps racing has enjoyed a recent resurgence, the prize money available for flat contests remains higher and if successful, this can work in your favour. First-time investors are likely to find it more affordable to join a National Hunt syndicate. Syndicate members will get to visit the stables on a regular basis and be able to watch their horse in training. There is also the possibility of being able to enter the parade ring pre-race. These are the major perks of being part of a syndicate and are a huge part of the appeal for racing enthusiasts. The runners are also likely to remain in training for longer and as a result, embark upon more winning opportunities. However, it is not uncommon for hurdlers and chasers to take three-to-four month breaks at a time. If you purchase a National Hunt horse, don’t expect to see it race every weekend.

racing

Source: David Carr via Twitter

Costs

Unfortunately, there are numerous costs involved in purchasing a racehorse and it’s unlikely you’ll see any significant return on your investment for at least the first two years of ownership. The initial outlay can vary greatly, with costs ranging anywhere from £60,000 to £200,000, and its price tag will be largely dictated by its breeding.

Once the purchase is complete, there’s a number of annual costs to incur. In 2015, it was reported that the average annual cost of keeping a horse in training was £23,000, a calculation that excludes additional veterinary costs and race entry fees.

It can be an expensive past-time and that’s why the majority of first-time investors tend to dip their toe in the water by joining a syndicate instead. This takes the stress out of the ownership process and small-share syndicates can be a great place to start. Costs tend to start at around £99 per month but it is also possible to opt for a bigger share if required or desired. The bigger the investment, the greater the potential returns.

Anyone Can Sign Up

It is not uncommon for celebrities to invest in a racehorse with the likes of Lee Westwood, Ronnie Wood and Sir Alex Ferguson all having multiple runners in training over the past decade. However, syndicates are far from exclusive and anybody is able to sign-up. Many of these organisations pride themselves on welcoming investors from all backgrounds and it can be a fantastic way of experiencing ownership for a fraction of the cost.

Is it Worth It? 

There is no definitive answer to this question. If you’ve got the time and enthusiasm to invest, then it is an enjoyable way to spend some of your disposable income. Most syndicate members and outright owners do tend to be horse racing followers and it always helps to have prior knowledge of breeding, trainers and race types. However, this is not a pre-requisite and it doesn’t necessarily equate to success.

There is an element of luck involved with owning a racehorse and while there is no guarantee of a return on investment, there is always the faint possibility of co-owning a future Derby winner or even seeing your horse go-to-post in next year’s Randox Health Grand National at Aintree.

How to Judge a Mutual Fund’s Performance?

mutual funds

A mutual fund is a pool of stocks, bonds or other securities that has been divvied up into shares for an investor to purchase. Choosing a mutual fund that is expected to perform well and meet your expected goals is done by thorough analysis and research. The steps to judge how a mutual fund is expected to perform are:

  • Classification-

Firstly, classify the various funds available on the basis of your goals. If it fits your scope, keep it in for comparison with others, if it doesn’t chuck it out. Many companies offer the same type of competitive models of the same type of fund which can be kept in for comparison. Set one as a benchmark and compare others to it.

  • Historical Performance Data-

Collect data of the mutual funds that you have selected and want to compare. Several financial investment tracking websites like Morningstar provide data of the funds over the years along with tools that will help you in evaluation

  • Analyse the Data-

Now, compare the selected funds and their performance data on basis of different parameters. These parameters can include risk return trade off and match it with your own risk tolerance. You can also find rankings and ratings for different funds on historical returns and risk on the websites thus making it easy to compare.

  • Measure Consistency of Performance-

Then, try and look at the individual returns for each year rather than the average returns. Check which fund constantly returns more than its set benchmark. There are some funds that might have fallen tremendously for just one year which might have affected the average return rate gravely but that does not reflect the consistency of the bond. That counts as an anomaly. It could also go the other way around where in the average is affected positively by a skyrocketed price for just one year. Also compare the fund’s upside and downside data against its peer funds.

  • Look at Expenses-

Expense Ratio plays a vital role in the amount of return that you are able to extract from your investment. Actively managed funds might have a higher annual expense as compared to funds that charge a higher management fee. All these costs are to be taken into consideration to maximise the real time return that you get. Only by minimising cost can you maximise profit.

The above steps if followed properly and carefully are sure to help investors in mutual funds to choose the perfect option suited to their goals. But care must be taken as to the nature of the bond and its consistency. After all, shares are nothing if not unpredictable.