Table of Contents
Don't settle for an investment fund
Use passive management funds
Seek maximum diversification
Make use of an automated manager
Invest regularly, no matter what happens
Don't settle for an investment fund
The first thing you should do to invest in mutual funds with common sense is… not settle for just one mutual fund.
Does it sound contradictory? It is not.
Mutual funds are a great way to invest, but you shouldn't gambling data indonesia invest solely through one mutual fund, because it could do you wrong. You should put your eggs in different baskets and diversify as much as possible by investing in several funds at once.
Use passive management funds
Now, knowing that you have to invest in different funds, what type of funds are the most appropriate?
And the answer here is that the best investment funds are those that are passively managed .
Yes, it is true that there are actively managed funds that have high returns and are very popular. But it is impossible to know in advance which funds will do well in the long term, so… why take the risk?
It is better to bet on what we know will do reasonably well in the coming years and will not cause us great volatility. And if it also has low fees , all the better, because that will translate into greater profitability for us as investors.
And the best way to achieve this is to invest in different passive management funds.
Index Funds Investment Guide
Seek maximum diversification
But… What should you look for in these funds? Well, continuing with what was mentioned in the initial section, you should look for maximum diversification within the different funds. As an investor, it is always in your best interest to minimize risk as much as possible.
As a general rule, you should look for funds that are diversified by sector, geographic region, capitalization or asset class.
The more diversification, the better.
Make use of an automated manager
The next step is to use an automated portfolio manager to sell the funds or ETFs that have risen the most and buy those that have fallen the most , so that growth potential is always maximized.
This will give you extra profitability in a simple way and with hardly any extra cost . This is what is known as rebalancing and it allows you to maximize your profits without having to spend even a minute more on the investment.
Invest regularly, no matter what happens
And last but not least: Invest regularly, no matter what . It doesn't matter if you invest weekly, monthly or quarterly, but you should invest regularly and consistently.
In this way, you will invest at times when the market is most expensive and at times when the market is cheapest. In the long term, you will have ended up investing at a fairly reasonable average price , and you will benefit from the upward movements of the markets.
Otherwise, if you only invest once, you will run into two problems: First, you will not be investing the money you earn as you earn it. And second, although you may invest at the best time, you may also invest at the worst. With regular investing, this last problem is eliminated.
So, how to invest in mutual funds with common sense is simple. All you have to do is invest in a good, diversified and automated portfolio of mutual funds. With that, you will have the best results with the lowest risk.