Use opportunity with caution - Go with mutual funds
Mutual funds have the ability to pick out good-quality investments that can survive the current business environment and deliver good returns over time.Updated: May 20, 2020 18:49 IST
This pandemic may have literally put brakes on your life, but let it not play a spoilsport to your long-term goals and financial plans. You can utilize this time spent working from home to work on your investment plans as well.
Historically, the economy has bounced back after every recession. So, if your budget permits, make investments that can provide you better growth with lower risks. And while you may attempt to do that, there is a limit to the information you may have access to or your capability to pick out winners from the thousands of investment options out there.
Moreover, most still do not understand the real impact of this pandemic and how certain industries may get affected. While strong business may survive and thrive, there is a good chance that many may scale down drastically or be out of work soon. In such a scenario, investing becomes a huge challenge.
In other words, we have a good opportunity to invest, but there is a bigger need for a cautious approach. This, therefore, is a time to invest in mutual funds.
Why invest in mutual funds
While there are many reasons to invest in mutual funds, we will focus on the ones that make them an ideal choice in the current scenario.
•Mutual funds have a team of research professionals and fund managers who have years of experience in managing investments. Using advanced research, analysis, and deep understanding of businesses, mutual funds have the ability to pick out good-quality investments that can survive the current business environment and deliver good returns over time.
•The current environment demands a measured approach to investing. This is not a time to commit all your funds in one go but to invest them systematically over the next few months. With an SIP, you adopt a disciplined and steady approach to investing that fits into your budgets.
•Some of the blue chips that were out of reach for many investors are now trading at good valuations. And mutual funds can provide you an easy access to a well-diversified basket of blue chip companies.
You may still be hesitant about choosing the right mutual fund. But do not worry as help is available for this as well! You could read up personal finance portals that assess various mutual funds. Or, better still, pick up the phone and seek the advice of a mutual fund advisor.
Do remember to be cautious while investing during these uncertain times.