Mutual Fund, a Mature Investment

Equity market has always been a volatile investment. Yet it has attracted many policy buyers, simply because of high re-turns. Many people have now included mutual funds as part of their financial portfolio, and they make an effort to understand market dynamics better.Should we buy stocks when inflation is high?

Should be buy stocks in soft-ware companies, with fluctuating currency value? Should we invest in mid-cap or long-cap funds? How much to invest in direct equity and how much in government securities? In the current context of demonetization, the time has never been easier to make a choice. If you choose to invest more in government securities, then go for long-term debt mutual funds policy. Due to fall in inflation, RBI is expected to cut the interest rates, and slow economic growth will make the market conditions more favorable. A safe in-vestment is in dynamic bond funds, as your fund manager will be able to shift short term bonds to long term form, depending on the market conditions.

Likewise, demonetisation has invited a lot of perception analysis. IT and software companies are expected to benefit the most, as India progresses towards a digital way of living. E-commerce companies, on the other hand, are likely to take a hit for a while, as most buyers prefer the cash-on-delivery mode. The real-estate sector will likely witness a downward trend. Yet, there is optimism on account of in-crease in transactions.

There are online investment guides which provide easy access to stock information. Online information on mutual funds comes handy in this competitive market scenario; precisely, predictive analysis on which sector or company is likely to witness an in-crease in valuation. The technology capsule perfectly complements traditional MF distribution channels. An investor can secure maximum information on funds performance, market performance, by making an optimum use of available channels.

Since, equity shares are subject to market conditions, it should necessarily be withdrawn when equity price is high. Even after your MF policy has matured, the investor should consider withdrawing money after accurately assessing the market price. Some-times, it is expected to go up further, and you may choose to wait, to fetch you maximum returns.

Smart tip: Invest in equity linked mutual fund schemes which have a lock-in period of at least 3-years to avail tax exemption under section 80c of IT act. Don’t rush after liquidity; even after completing your standard policy tenure (minimum of 3 years), withdraw your policy money only when market price is expected to be maximum. If you are required to invest Rs 1.5 lakh as investment proof for your annual IT exemption, then 3-yr MF policy holders are eligible (for the exact amount invested, up to 1.5 lakhs).

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