5 Tips For Creating A Long-Term Mutual Fund Investment Portfolio

The power of compounding is a beautiful concept, and a long-term investment strategy is a cause behind it. You invest a certain amount and see your wealth grow with time. A successful long-term investment strategy requires some efforts. You need to study your risk goals and research several mutual fund investment products to form an ideal investment strategy.

Why is long-term investment beneficial?

There is no fixed tenure to define ‘long-term.’ If you are in your 30s and planning for retirement, your long-term could be 30 years. The definition varies upon individual goals, with most investors considering a period between three to five years or more. Long-term investments help secure funds for the future through SIP.

You can start small and build a sizeable corpus because you have enough time for assets to appreciate. For example, if you invest in mutual fund showing a 10-year historical return of 12% 10 years ago with Rs. 10,000, your investment today would be worth Rs. 22,000. Past performance is not an indicator of the future, but you can surely earn decent returns.

Tips for creating the portfolio

Every online mutual fund investor needs to create an investment portfolio, just like regular investors. You need to ensure your financial needs are in line with your investments and provide decent returns.

Define your long-term

There are several types of long-term investments. The first step in creating a long-term strategy is to define what is long-term for you. There can be multiple long-term portfolios with different objectives. For example, you can plan a portfolio for retirement depending on how many years you are away from retirement. You can also save tax through ELSS investments.

Research on investment options available

Perform extensive research on different investment options. While equity funds have a higher risk-reward ratio, even under the broader categories, there are at least 10 various funds with varying nature. For example, a small-cap mutual fund may be riskier than a large-cap fund.

Assess the risk level

It is important to know your risk capacity while investing in debt funds as the markets are unpredictable and can affect your returns. You should know your financial goals and invest money in financial products that can help you compound your corpus.

Develop the investment strategy

Once you have clarity on your long-term goals and your risk profile, you can decide how much money you want to invest in each type of mutual fund. Your long term goals can be varied: retirement, higher education, marriage, buying a house, children’s education and more. Choose your online mutual fund investment strategy accordingly.

Diversify your investments

You can continuously diversify your investments to get the best of most assets. You can use a mutual fund app to track and maximise returns over a longer time frame. With so many technological advancements, investing is no longer challenging.

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