Those who have no investing experience should begin with mutual fund investments…
25-Apr-2011 •Research Desk
What should be the approach to enter in market with no experience?
- Deepak Mathur
Equity mutual fund is the best investment option available to get stock market exposure, especially for one who has no experience in investing. Simply put, a mutual fund is a professionally-managed collective investment scheme that pools money from many investors to buy stocks, bonds and short-term money market instruments or combination of all depending on a particular scheme.
You should be aware that when you invest in equity mutual funds, you are right away exposed to market risks as a unit holder. And you proportionately own part of the business in which the fund you own has invested in.
For a new investor, we suggest you consider investing in a balanced fund. These are funds that over the past one year will have an average have equity exposure over 65 per cent. This way these funds bring in stability to their performance and also insulate the returns from market volatility. You may consider investing in funds such a HDFC Prudence and Reliance Regular Savings Balanced which fall in this category and have a proven track record and performance history.