Monitoring your investment decisions or investment portfolio is of prime importance as it leads you towards your goal of being a successful investor. The same holds true even for your Mutual Funds Investment. You need to analyze and monitor your Mutual Funds Portfolio.
With respect to Mutual Funds, you need to monitor at least four things. The first is the number of Mutual Funds owned by you? Second is how much money has been invested in Mutual Funds? Thirdly, you need to monitor that In How many Mutual Fund Categories You Have Invested? And lastly, how are your Mutual Funds performing? All these factors play a crucial role in determining your success as an investor.
It is just not enough that you buy Mutual Funds and then forget all about it. This approach would lead you nowhere and you would not be able to make profits out of your Mutual Funds Investment. So today we focus on all these factors and determine what can be the right strategy of investing in Mutual Funds.
Firstly we need to take a count as to how many Mutual Funds do we actually have. The count is necessary as it gives us the exact figure and our level of Mutual Fund Portfolio. The count shows us that is Mutual Funds really important to us as an investment option. Are we making the optimized usage of Mutual Funds or not? Or it is so that we have over bought Mutual Funds.
Having too less or too much of Mutual Fund is not good at all. Less number of Mutual Funds means that you are losing out the investment opportunity served to you by Mutual Funds. And too many means that you are taking a high risk of investment. So at the end you need to wisely select your Mutual Fund portfolio.
Second, you need to monitor that how much money you have actually invested in your Mutual Funds Portfolio. This figure would give you a correct idea as to how much importance you have given to Mutual Funds. A large amount of money invested in Mutual Funds indicates that Mutual Funds are a vital part of your Investment portfolio and you ought to take your Mutual Funds more seriously.
Thirdly coming to the most important aspect that is, In How many Mutual Fund Categories You Have Invested? Basically there are five categories of Mutual Funds which you can choose to invest in Mutual Funds. They are Stock Funds, Bond Funds, Money Market Funds, Balanced Funds, and Asset Allocation Funds. Our analysis presents that you’re Mutual Funds should not be composed of the same type of fund categories. Let us understand this further.
Suppose you have bought 10 Mutual Funds and in all of these you had invested in Large Cap Stock Funds. So if the Large Cap Stocks prices fall and do not register an appreciation over a long term, your overall return on investment would suffer. This has happened chiefly because you have locked all your investments in only one type of Mutual Fund category. And that Fund category had not performed and so you registered losses. Instead, if you also had gone for categories such as Bond Funds, Balanced Funds or even for Asset Allocation Funds, the scene would have been quite different. Fund category diversification would have helped you to optimize your returns and you would have gained instead making losses.
So a proper mix of mutual fund categories is essential for you if you really want to safeguard yourself from losses and register optimized returns. If you have more than one Mutual Fund with you, then it is necessary to choose different categories of fund. Diversification in Funds is a defensive investment strategy which results into profits in the long run.
Lastly, you should regularly monitor the performance of your Mutual Funds. This would give you a clear picture as to how your funds are performing and you would be in a position to decide whether you want to continue investing in the same or choose some other fund.
All the above monitoring about Mutual Funds investments and specifically for the factor In How many Mutual Fund Categories You Have Invested? Would help you to profit from your overall Mutual Fund Investment Portfolio.