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Investment advice for millennials

Parents and elder relatives constantly pester Millennials to save more. However, taking out money for investments is not easy when societal criticism and peer pressure trap you to spend more than you save for tomorrow. But, this is the ideal age to start planning for finances and, therefore, investing more diligently. When talking about investments, mutual funds are definitely the best option even for beginners. Mutual funds offer an opportunity for a diversified portfolio, liquidity and low costs.

Whether one wants to save for a short-term or a long-term goal, mutual funds can accomplish both. With the comfort of investment one can start with a tiny amount also. However, how to get the best returns is a big question for millennials. Millennial investors can follow the following strategies to make the most of their investment.

1. Why choose Mutual Funds?

The time is right for accumulating more to your investment portfolio. Some investment selections are safe and have a potential to give good returns in the future. Mutual fund invests in firms with better track records with the objective to provide capital appreciation in long run. The high return vs. high risk strategy could be suitable for millennial/young investors.

2. Keep Investing when the Market Appears Hard

Keep your Systematic Investment Plans (SIPs) running and do not worry about the functioning part of mutual funds. Mutual funds are one of the finest investment choices one can make regardless of market conditions. Redeeming your investments due to huge market volatility is not a good decision as continuing SIPs will help you balance your average cost of investments and will reap you benefits of averaging over a long term duration. So, keep investing even if the market corrects and top up your investment in SIPs.

3. Stay Safe from Redemption Burden

There have been several market falls in the past but there is always a recovery post the fall. So, it is of significant importance to keep emotions aside and stay calm and not redeem your investments in fear and anxiety. It is also essential not to go overboard with investing. Ups and downs of the market are part of the investment journey and as an investor, you must refrain from panic actions.

4. Review Periodically

Ensure that you take the periodic review of your portfolio and your financial goals to alter your portfolio according to changes in the market, risk appetite, your age and goals. When the market is volatile, you may need to alter your investments based on your risk appetite and market conditions. This keeps your funds active as per the current market circumstances which adds to a decent return to your overall portfolio throughout the entire investment tenure.

5. Diversify Your Investment

A diversified portfolio holding multiple asset classes is the best way to make optimum risk-adjusted returns from various asset classes. Although it is true that asset allocation and funds selection depends entirely on investment horizon, financial goals, and risk appetite; it is also essential to avoid investing in several funds as it might not be possible to track their performances.

The best investment advice for millennials is to start investing in mutual funds and enjoy the benefits of long term investing and compounding.

Views are personal: The author Pankaj Ladha is a mutual fund distributor from Kota.

Disclaimer: The views expressed are of the author and are personal. TAMPL may or may not subscribe to the same. The views expressed in this article are in no way trying to predict the markets or to time them. The views expressed are for information purpose only and do not construe to be any investment, legal or taxation advice. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management Pvt. Ltd. will not be liable in any manner for the consequences of such action taken by you.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

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