Mutual Fund :
Mutual Funds are like groups of stocks that you can buy together. But you don’t buy them yourself.
Mutual Fund managers :
You give some money, like 30K, to a person who knows how to buy stocks. This person is called a Fund Manager. He or she will use your money to buy stocks for you and other people in the group.
Purchasing shares independently is comparable to using mutual funds.
The Fund Manager will receive your monthly contributions, which you may choose in terms of frequency and amount.
[1] A systematic investment plan, or SIP, is what this is known as. It is not up to you, however, to choose the stocks that the fund manager will purchase.
[2] You have control over your SIP amount and frequency, but not over your stock selection.
Sometimes, the market is very high. This means that the stocks are very expensive and hard to find. If you give money to the Fund Manager when the market is high, he or she will have a hard time buying good stocks for you.
Why? because the stocks are too risky and may not give you much profit.
[3] The market is high when the stocks are costly and scarce. This makes it difficult for the Fund Manager to invest your money.
Why? because the stocks have low safety margin and low return potential.
[4] Why? because the fund manager may not find many good stocks that are cheap and have a lot of growth potential.
[5] The thing is, most fund managers don’t tell you to stop giving money when the market is high. They still say SIP, SIP, SIP. Why? because they make money from your SIP. They get a commission or fee for managing your money. So they are not telling you the truth: it is better to slow down or stop investing for a while when the market is high.
[6]You are different from fund managers. You are a private investor. You have no pressure to take your money to the market. You can wait and see the right investment time. You lack nothing.
Think about it: if you give money to financial managers when the market is not good for investing, they still have to buy shares for you. They cannot keep your money and wait for a better time.
But you can do it. You can keep your money and invest when the market is low. This means the stock is cheap and has a lot of growth potential.
Understand that to make more money with stocks, you should invest less when the market is high and more when the market is low.
If you invest the same amount of money in all types of markets, the profit will be average. SIP is not something you can do without thinking. Please consider.
I hope this blog will help you. Please remember that you should conduct your own research before making any investments and that this is not financial advice. Feel free to ask me any other questions or requests you may have. 😊
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