16 Aug 2023
On every Independence Day, we remember the sacrifices made by thousands to achieve the country's freedom. Our freedom fighters have taught us that perseverance and patience through a long struggle were critical to achieving freedom. Similarly, financial independence can be earned through hard work, discipline, perseverance and patience. These characteristics, if applied to your mutual fund investments, can help you achieve long-term financial 'atma nirbharta' or financial independence.
There are three key mutual fund investment principles to follow that can help achieve financial independence:
Be a long-term investor: We all may have an amount in mind that we feel will help us sustain and live comfortably or fulfil our aspirations. However, to reach that goal, one must start investing early and stay invested over the long term. The money can start working as soon as you start investing and can help you build substantial wealth over a long period of time. Early investments can help you benefit from the power of compounding and help minimise your risks from market volatility in the longer run.
Invest regularly: If you are looking to achieve your financial goal at the earliest, then it's better to invest on a regular basis. Markets can be hard to time, which is why regular investments through systematic investment plans or SIP routes provided by a mutual fund can help take advantage of any market situation with an aim to deliver the optimal results. Regular investments also ensure that you don't have to worry about the cost of investments as, over the long term, these costs, despite the market fluctuations, can average out. A big plus point of regular investments does not only do it inculcate disciplined investing behaviour but also does not put a big pressure all at once on your pocket.
Diversify your assets: Diversification of investments into different asset classes can help insulate you from markets and economic risks, if any. In different economic phases, different asset classes tend to perform differently. For example, gold can be a hedge against a high inflationary phase, equities may perform when markets are at a peak, while investments in debt instruments can be attractive when interest rates are going up. So, having a basket with a diversified set of assets can help manage the risk–return ratio.
So, make financial freedom your goal, and start investing.
Disclaimer:
The document is not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. The distribution of this document in certain jurisdictions may be restricted or totally prohibited, and accordingly, persons who come into possession of this document are required to inform themselves about and observe any such restrictions.
The document may include statements/opinions which contain words or phrases such as "will", "believe", "expect", and similar expressions or variations of such expressions that are forward-looking statements. Actual results may differ materially from those suggested by the forward-looking statements due to risk or uncertainties associated with the statements mentioned with respect to but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which may have an impact on services and/or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc.
Past performance may or may not be sustained in future. Investors may consult their financial advisors and /or tax advisors before making any investment decisions. Kotak Mahindra Asset Management Company Limited (KMAMC)/ Kotak Mutual Fund (KMF) is not guaranteeing or promising or forecasting any returns/future performance.
SIP does not assure a profit or guarantee protection against loss in a declining/upward market.
Mutual Fund investments are subject to market risks; read all scheme-related documents carefully.