Investing is something that everyone, at every point in their life, thinks about. A general trend is observed that a lot of people invest by keeping most of their money in the bank and buying a house. Anything beyond such an investment is what most of them don’t think about, either because they don’t have the time or knowledge to do so.
Real estate, our saving accounts and our precious belongings come out as a popular investment options. The reason for it is simple – low risk.
When we talk about real estate and precious belongings, it can be tough to estimate how much money you will get after selling them for cash in future. But, the amount of risk involved in these investments is very low as compared to the other types yet the amount of profit that is obtained is drastically lower.
When we want higher profits, calculated risk taking is necessary. As an investor, you would obviously want to get much higher profits for the investments that you make and sometimes, be willing to take the added risk, as well.
Shareholding is one good way to gain higher profits. In case of any success, they the shareholders reap the benefits together but in case there is a loss, they all pay for it.
Since the amount of failure is uncertain, one needs to be cautious while taking any financial decisions. Taking bad decisions can lead to huge failures and can also leave you bankrupt!
So, what can be done to make better investments with minimal risks? How to get maximum profits and still be financially stable?
The answer to all of them is mutual funds.
Mutual fund is similar to shareholding where numerous investors pool in money for income generation. But here, your fund investments are selected and taken care of by qualified professionals who are trained thoroughly in asset management and can reduce your chances of loss by making you take smart decisions.
For planning your finances and to assess the amount of assets, liabilities and investments, it’s always good to have a third-party who has great knowledge and tactics to deal with such metrics in order to get smart opinions and support.
And in today’s busy world, with massive uncertainties around us, having a financial expert look after you and your money goals and guiding you through them can be the best thing one can ever think of.
Many professional companies like ICICI Prudential Mutual Fund have started giving professional help to investors and even beginners, and have come up with new techniques to help them make better investment decisions. One such technique is Dynamic Asset Allocation.
What is dynamic asset allocation?
Dynamic asset allocation is a strategy that re-balances portfolios to bring the asset mix back to its long-term targets. This helps in generating reasonable returns even in volatile markets. The strategy is of buying when the market is low and selling when the market is high to generate alpha and limit losses while keeping emotions like greed and fear aside.
Allocating higher in equity when the Equity Market Valuation is low and lower when the Equity Market Valuation is high is the key. Dynamic asset allocation funds are most suitable for lump-sum investments of the investors and is suitable for investors who are seeking one term wealth creation solutions and an equity fund that aims for growth by investing in equity and derivatives.
How can you put to use this dynamic asset allocation strategy in your investment plans?
Schemes like ICICI Prudential Balanced Advantage Fund (BAF) aim to look after your growth and safety. BAF is an open ended equity fund that creates a balance between equity and debts dynamically, in order to give you the best returns.
Professional companies will have the best advices regarding what to invest in, how to buy stocks and get appropriate mutual funds, management of risks involved in the investments and managing your taxes and return rates.
You can get started by doing some research on this instrument here.
Be it a novice or an expert investor, given today’s financial scenario, it is a wise decision to not just depend on your own understanding, but substantiate it with the in depth expertise of financial planners and investment advisors from trusted and reliable institutions.
And as they always say, best to be safe than sorry!
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Image Credits – Google Images, Sébastien Thibault
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Views presented in the article are those of the author and not of ED.