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Last Updated : Feb 24, 2017 05:22 PM IST | Source: Moneycontrol.com

What matters when you plan to invest in MF for long-term?

There is quite some effort that a lot of people put in when they are planning their long term investments.

Arnav Pandya

One of the goals of many investors when putting money into mutual funds is to have a long term outlook. This is a positive thing because it enables them to start off on the right footing but one also needs to keep the period under consideration in perspective. This is due to the fact that a very long period could well mean that there is additional work that needs to be done and this would need a change in the manner of dealing with the investment from the investor. This is essential for the investment to be successful and hence here is a look at this condition and how it should be tackled.

Very long outlook

There is quite some effort that a lot of people put in when they are planning their long term investments. It is now common for a lot of people to say that they are willing to invest for periods that could be 15-20 years away from the current time period. This is a good thing as far as the overall planning is concerned because it means that the investor is taking a long term outlook for their investments. This will help them to select assets and options which will be useful for them and hence has to be considered in this perspective. The challenge here is to ensure that the start of the planning process which has been made properly is now being carried to its logical conclusion in an effective manner.

One time investment

The other thing that many investors think about when they have this kind of long term outlook is that they want to make an investment and then wait out the entire period for it to deliver returns. They think about choosing mutual funds for this purpose and again while the intent is right there will need to be some tweaking done on this front. The main thing that needs to happen is that the investor should be ready to choose a fund and then hold it for some time in their portfolio. This will have to be followed by a review of the investment at some point of time and if needed there might have to be some changes made in the funds chosen.

Constant evaluation

A mutual fund scheme might look to be a good performing one at a certain point of time. It could have a great track record too and this would increase the confidence of the investor that they would be able to gain from the rise that would come into the future. However it is not that every fund would continue its amazing run for an indefinite period of time. There are chances that the investment could become an ordinary performing one after some time and this would begin to show clearly for the investor. The decision for the investor at this point of time would be to see if they should continue with the fund or change this.

Mental preparedness

The need to change the fund would be an important part of the whole journey and hence there has to be mental preparedness from the side of the investor to ensure that they are able to do this when the need arises. Having a long term outlook and then selecting a fund does not end the work for the investor because a part of this remains and this is to constantly check that the goals are being met and the investment is on target. This is important and it is something that needs to be taken into consideration so that if such a situation is faced the investor does not end up being surprised and they are able to take action in the matter.
First Published on Feb 21, 2017 03:55 pm