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99.'' To invest sucessfully over a life time does not require a stratospheric IQ, unsual business insights , or inside information . Whats needed is a sound intellectual framework for making decision and the ability to keep emotions from corroding that framework .'' Explain the key steps to Mutual Fund investing.
The most critical decision for the investors is the mix of debt and equity that he/ she should have in his /her portfolio . This should be in line with his/her risk taking ability and investment horizon . Generally , debt is viewed as safer than equity . According to Warren Buffett, '' to invest successfully over a life time does not require a stratospheric IQ, unsual business insight , or inside information . What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework for making decisions and the ability to keep emotions from corroding that framework.'' Once allocation between the two broad asset classes is decided , investor has to get into the sub classification . For example , out of the allocation to debt, he /she has to set apart enough money in liquid schems to meet emergencies . Liquid schemes are considered to be lowest in risk among the debt schemes , because they invest in money market securities that experience the lowest volatility in prices . Similarly , he /she needs to decide whether to invest in junk bond schemes and sector funds (appropriate for high risk investors) or gilt schemes and equity income Funds ( suitable for low risk investors).
Ans: Steps to Mutual Fund Investing are;
- Asset Allocation
- Selecting MF Scheme Categories
- Identifying Specific MF Schemes
- Making the Investment
- Review
- Will.