I am an IT employee earning Rs 93,000 per month. How should I start investing in mutual funds?
Even as investing in mutual funds has become super easy these days, many individuals are still looking for the right way to start their investment journey. In an email to FE Money, one such individual, G Rakesh, says he is earning around Rs 93,000 per month from his job in the IT sector. He wants to know ways to invest in mutual funds.
Rakesh writes: I am currently working in the IT industry, earning around Rs 93,000 per month. Please suggest how to invest in Mutual Funds. I have a low to medium-risk profile.
Mayank Bhatnagar, Chief Operating Officer at FinEdge, a financial planning firm, answers the reader’s query:
Congratulations on your decision to invest in Mutual Funds! We hope that your journey to wealth creation is rewarding and fulfilling. The first thing that we would suggest is not to make the common mistake of starting off with “which fund to invest into”. This approach of selecting funds based on short-term past returns leads to losses in the long run.
Instead, we would suggest that you begin your investing journey with an evaluation of your cash flows so that you can set up some healthy targets for your key financial ratios such as savings surplus, reserve surplus and debt income.
Once you have arrived at a comfortable amount that you can save for your future goals every month in a systematic and disciplined way, you should educate yourself on the risks and rewards of mutual fund investing.
Also Read: My salary jumped 40% after job change. Should I increase SIP or prepay Home Loan first?
Most investors who fail to create wealth from mutual funds do not do so because they failed to predict the best fund, but because they invested with incorrect expectations. As a result, they end up making greed or
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