InvestorQ : We should be aggressive or cautious about the mutual fund investment strategy?
shivangi Arora made post

We should be aggressive or cautious about the mutual fund investment strategy?

Answer
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7 months ago
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Your investments should cater to your financial profile, risk appetite, and financial goals. It should not be based on the year the investments are made. Ideally, when you are investing in a mutual fund (an equity option), you are aligning your investment to a long-term goal. Your focus should be on your strategy based on your financial profile. If it's aggressive, then follow that strategy. If you prefer to be risk-averse, then follow a strategy in tandem with that perspective. And this should not be changing yearly. Otherwise, it will affect compounding in the long run.

Generally, mutual fund investors need to keep to following things in mind:

  1. Your risk appetite.
  2. Your life goals (education, marriage, children, housing, travel, etc) and finally the retirement plan.
  3. This requires making a broad plan listing income, needs (essential), and ‘wants’ (discretionary).
  4. Asset allocation, broadly between Equity and Debt. The longer your time horizon, the more you can put in Equity.
  5. Invest in good Life insurance, health insurance and have an Emergency Fund to the tune of 6 months' expenses to tide over unforeseen events.
  6. Once you have a concise plan, then external events become irrelevant. You follow it diligently and you will achieve your goals in the long term. Market ups and downs ultimately even out.
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