Diwali is widely celebrated in India; a joyous festival marked by social gatherings, bonding with close family, gifts to loved ones, and making big-ticket purchases like a car, house and so on.
While Diwali facilitates Indians to spend, it can also be an opportune time to grow money by investing in various asset classes via mutual funds.
How investors can add sparkle to their portfolios with mutual funds?
There are possibilities of many benefits of adding mutual funds during Diwali that can add that extra spark to your overall investment portfolio.
Diversification:
During Diwali, you would have noticed how sweet shops display an array of gift boxes packed with assorted sweets, something to satisfy every palate. Similarly, diversification in investing can be effective way to spread risk so that at any given time, there is at least one asset class that may be generating returns. But, the principle of diversification works within mutual funds, too. For instance, you could choose a mix of equity and debt mutual funds. Equity mutual funds diversify by investing across different companies and sectors. Plus, many schemes are centred on particular themes; there are sector-specific funds or others tailored around large caps, mid-caps and small caps. In debt mutual funds, too, you could invest in liquid funds, dynamic bond funds and other debt schemes depending on what’s suitable. However, whatever you select will depend upon your risk appetite and investment horizon.
Managed professionally:
If the prospect of doing your research is too overwhelming, you could consider
mutual-fund investments.
At the helm of mutual funds are professionals with the experience and expertise to manage these funds. However, it is advisable that you study the various schemes on offer to choose the mutual fund that aligns with your financial goals.
Rebalancing your portfolios:
In the days before Diwali, cleaning efforts reach a fever pitch as households discard old things to make way for the new. As individuals evolve, so do their goals and needs at various points in life. Similarly, depending on how your financial goals have evolved, it may be advisable to rebalance your mutual fund portfolio during Diwali. This would mean taking a long, hard look at your mutual funds and changing the weightage assigned to each scheme to align with your revised financial goals.
Risk appetite and financial goals:
Your risk appetite and investment horizon will primarily determine how you invest in mutual funds. If you do not have sufficient resources but still wish to invest in mutual funds, instead of making a lump-sum investment, you could opt for
Systematic Investment Plans (SIPs),
which is a more staggered approach to investment. Short-term investors or those looking to make a big purchase shortly could invest in liquid funds. An investor with a high-risk appetite could invest in equity mutual funds, which have the potential to generate inflation-beating returns.
Why invest in Mutual Funds during Diwali?
Diwali is considered auspicious for new beginnings. Diwali day in the Indian stock market is characterised by one hour of muhurat trading. Given that, Diwali indicates the beginning of the New Year, muhurat trading symbolises the potential for prosperity for the entire year. For individuals, the auspiciousness of Diwali can manifest in various ways – entering new ventures, forming partnerships, buying expensive things or simply changing the way you have been doing things. Hence, whether you are a first-time investor, an investor looking at new investment avenues, or considering a significant overhaul of your current portfolio, the festival of Diwali might be a good opportunity to consider starting investing a fresh or evaluating your current investment from a fresh perspective. From that point of view, investing in mutual funds during Diwali can be an option that an investor may consider.
To concludes
Diwali this year (10-14 November 2023) can be a time for new beginnings in your personal, professional and investing life. Hence, it’s also an excellent time to consider adding or rebalancing your mutual fund portfolios to maximise your returns depending on your risk appetite and investment goals.
Disclaimers:
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
Mutual Fund Investments are subject to market risks, read all the scheme related documents carefully.
