It is not a Quick Rich Scheme
Investing in equity is a long-term wealth creation plan.
You may have heard stories of how people have made fortunes in stocks by trading in stock markets or derivatives but most of the time it is a half-truth as they never tell you how much they lost.
So if you are considering creating wealth for your long-term goals like retirement, children’s education, etc. it’s preferable that you look at equity investment as a long-term plan.
Selecting your Portfolio
Selecting your portfolio is an art as well as a science. There are thousands of Mutual Funds schemes and hundreds of options.
The Thumb rule here is to keep it simple.
Investing in too many schemes and investing in every new frenzy in the market is a recipe for failure.
Managing your Expectations of Returns
Many times people have unreasonable returns from MF Equity investment. Remember equity can give you many superior returns compared to Bank FD or post office scheme etc. but don’t expect a miracle.
You are investing in equity because it is one of the few asset classes with the potential to beat inflation.
When Market Falls
This is the time when panic sets in people. The immediate knee-jerk reaction they have is selling or redeeming the investments.
This tendency has recently reduced but still the behavior continues for a large population.
If you have invested with clear-cut goals then you don’t have to panic at every market fall.
Remember what market guru Warren Buffet has said “it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.”
Monitoring the portfolio
Equity Mutual Fund investment is not a one-time activity. It is important that you review your portfolio on a regular basis to make necessary changes.
That does not mean you have to churn the portfolio constantly but it’s about monitoring it regularly.
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