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When is the right time to invest in mutual funds?


When is the right time to invest in mutual funds?


Many investors often wonder when the right time to invest in mutual funds is. Typically, the right time to invest is right when you start earning or can save. But in reality, there’s no right or ideal time to invest in mutual funds. Mutual funds have several different schemes suitable for different individuals. Before answering the question “Is it the right time to invest in mutual funds?” let’s quickly look through what mutual funds are and a few types.

invest in mutual funds

What are mutual funds?

Mutual funds are a collective investment process where funds are pooled into different assets like equity funds, debt funds, etc., to generate returns.

Mutual funds consist of various types; it includes:

  • Debt fund –

A safer option that helps generate stable income. This type of fund includes treasury bills, commercial papers, PSU bonds, etc.

  • Equity fund –

Market-linked products are made in company stocks typically for capital appreciation or wealth creation, like tax savings funds, small-cap, large-cap, mid-cap funds, etc. They’re known to be slightly riskier.

  • Balanced or hybrid funds –

Investing in both debt and equity funds, so a portfolio sees the potential of growth and income. These include monthly income plans, child plans, pension plans, etc.

Now that you know the kind of mutual funds there let’s consider when one should invest.

When is the right time to invest in mutual funds?

With mutual funds, there’s no fixed criteria or thumb rule, the right time. With no minimum investment amount and a low entry barrier, anyone and everyone can begin their financial journey with mutual funds. You can start your investment journey by putting as little as Rs.500 in a SIP every month to start earning to harness the power of compounding and secure your future. If you have other responsibilities, you can choose the right time to start investing by looking at your situation and goals.

But, theoretically speaking, the right time to invest in mutual funds is when the Net Asset Value (NAV) (assets minus the liabilities of an entity) is low. This way, you get more units for your investment. The following are three ideal scenarios to invest in mutual funds:

  • When the real estate market is in a slump
  • When the return on bonds is high
  • When the market is at its lowest

Mutual fund investments can be made anytime, but you can use these scenarios to invest so that you get more value out of your investment.

In Conclusion

There’s no reason you should delay investing. When you’re confused or unable to find the right way to begin, you can always look to financial apps like the moneyfy app for assistance for a quick solution to your investment needs. Start investing today to set up a solid financial future for yourself and your family.

Samuel J. Morales

Beer geek. Tv trailblazer. Passionate internet practitioner. Gamer. Lifelong introvert. At the moment I'm working with tar in Africa. Spent 2001-2005 getting to know junk bonds in Minneapolis, MN. In 2008 I was marketing squirt guns in Naples, FL. Earned praised for my work selling pond scum in Minneapolis, MN. Set new standards for merchandising action figures in Miami, FL. Earned praised for my work implementing sock monkeys in Prescott, AZ.