How should a new Investor Enter Market?

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Many people tend to come to Market for investments mainly because they might have heard others speaking about the profit they got after investing in the market.These stories are true but as a coin has both sides investing in the market also has got both sides.What i mean is that there are pros and cons of investing in mutual funds.


The investment pattern of many new investors are such that they tend to go behind the past returns a fund gives and invests in those funds which is giving the highest return.They are hoping that the fund will perform in a similar manner for the coming years.This can be dangerous without understanding the fundamentals.

As a new investor who wants to invest in the market they should first study about the different kinds of funds available in the market and what they offer.For example there are different classes of funds under the equity portfolio like Large Cap,Multi cap,Madcap,Small cap etc.One should choose funds under these categories according to the goal in mind as to when they want to take out the money.

To keep things simple a person entering into market his best option would be to start with a Hybrid Fund which is a mix of Equity and Debt.I say this because a new investor should not be disappointed with the volatility in the market which in these times of pandemic is so true.The thing is one should experience the market and its volatility for some time until one becomes comfortable with it.In the case of Hybrid Fund since there is a debt portion in the portfolio the fluctuations in the NAV(Net Asset Value) of the fund will be less compared to the index.Then slowly he can move to Multi cap and so on.

The best way to understand market is to experience it.Also one more thing i want to bring in is that most of the people think invest and forget strategy will work in the equity scenario wherein they will invest some money at some point of time and they forget about it and when they look back after 10 years or so they find that returns were not as expected.The thing with equity is that it needs active management it means that once should review the portfolio at least once a year and re-balance if necessary. This is yet another vast topic and hoping to cover it in another blog.

Please leave your feedback in the comments section.

Happy Investing 😊

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