How much Investment to Start With

By | February 25, 2017

It is a very general question when you start investing in mutual funds. How much Investment to start with ?.

I have a simple answer Start with whatever you are comfortable with. There is nothing to say, this is the minimum or this is tGoddess of Abundancehe maximum. All you need is the conviction that I have to invest. Believe that mutual funds is one of the investment that need to be in your portfolio. Once you start, there will be some interest generated in yourself to see how is the investment is performing. It is ideal not to look for the performance on a daily basis. Some times you might see some losses in the first week of your investment. Don’t get disheartened with this. Goddess Lakshmi will take care of this :P. and one fine day, if you continue with the investment, you are certainly going to see some impressive gains and these will be much more than a traditional investments.

Most of the advisers do not advise on the possible losses in the first few weeks of investment.  When you decide to invest in mutual funds, you are mentally ready to gain from the movements of the Markets. The movement could be positive or negative as well. It is a chance that your investment started on a bad day for the market.

Coming back to the question of How Much Investment to start with generally depends on comfort only. As mentioned earlier, there might be losses in the initial few weeks. The value of the investment moves wither side on a daily basis. Based on this you need to decide on what your heart can take. It is not only in percentage terms, but in absolute value also. Say, you are ready to invest 100,000 and decide you can bear up to 10 percent loss, this amounts to 10,000. But if your investment is 1,000,000 and the same 10 percent is 100, 000.

I am not being pessimistic here. Frankly barring very very few (0.01%) of the mutual fund universe have lost by more that 10% in a year (i am talking of Year not few weeks). Most of the mutual funds (90+%) give your returns more than 10% in a year. If your Choice of mutual fund is right, you might even see a 30-40% raise in one quarter itself. so, keep your emotions away from the investments especially where it is linked to volatility. Just bear in mind that you are ready to stay invested for long term and there is a gain in this.

Wish you all the best for your first mutual fund investment.