Top Factors Determining the Right Time to Invest in Mutual Funds


Ideally, you can invest in the mutual funds whenever you have surplus cash as it is better to stay invested than to sit on cash. However, if the market is highly volatile, you might want to time your investments to make an entry at a time when it is not at its peak. It all comes down to your risk appetite. If you are a low-risk investor, you might want to wait for the market to come down by 10 to 15 percent before you invest in mutual funds. You should also do a bit of research to find the mutual fund that aligns with your financial goals as you do not want to sit on debt-based mutual funds when you are looking for high returns. Here are the few factors that would help you determine the right time to invest in mutual funds –

Risk Appetite

Check with your risk tolerance before you invest in mutual funds.  If you are already well invested in other steady investment tools like PPF and FD, you might want to consider investing in high-risk and high-return oriented mutual funds. In such a case, you can invest any time in the mutual funds and wait for your money to grow. Such investments do have risks associated with it, but such is the case with any form of investments. You can, however, do your bit to reduce the risk so that you are not disappointed later on.

Market Positioning

Before investing in mutual funds, you need to check how the market has been faring in the past few weeks or months. It would help you get an idea about the current market and financial trends. If it is at the very peak of its rise, wait for the market correction of at least ten to fifteen percent before investing in any mutual fund. However, if you are looking for long-term investment and have the high-risk tolerance, investment in a mutual fund can be made just about any time. Long term investments are beneficial if you are looking to invest for your retirement and would do not want to liquidate your investments any time soon.

Consider ROI

If you have a considerably high-risk appetite and seeking to invest in high-returns high-risk equity-based mutual funds through SIP for the long haul, timing doesn’t actually matter. It is because you are looking to stay invested for at least five to ten year period. In such case, time counts as money, and sooner you start your SIP-based MF investment, higher returns it would generate. The returns generated by different mutual funds are different based on their investment philosophy, fund managers, sector, expense ratio, and more. Do a little research and invest in a fund whose investment philosophy aligns with yours.

Long Term or Short Term

For how long you would like to stay invested will also allow you to pick the right mutual funds. When you invest in mutual funds for longer, you get higher returns. Short terms investments might give you quick returns, but the profits will not be that high as you would expect. Thus, you need to decide your financial goals and then pick the best investments that will align with them.

Tax Saving

If you want to invest your money to help you provide tax savings, then pick mutual fund such as ELSS schemes. You can choose to invest in them through SIP or even pay a lump sum if your financials allow you to. Even if you invest in mutual funds to help you save money on tax, you are still going to earn handsome returns from it that will be an added bonus.

There is no doubt that investing in mutual funds such as HDFC mutual fund and any others will provide you with excellent returns. But, being safe and doing your research is essential if you want your investment to be effective and safe. It is all about picking the right mutual funds to invest in rather than gambling away your money. There are any financial magazines and newsletter that you can read to help you get an idea about the market and to help you find the funds that have long term benefits.


Please enter your comment!
Please enter your name here