The Most Authentic Guide on Personal Finance and Investments

Words of Wisdom : "If past history was all that is needed to play the game of money, the richest people would be librarians." ~ Warren Buffett

3 Mutual Fund guidelines you must Never forget

First, choosing best funds DOES NOT mean choosing the “top” performers but rather the “consistent” performers. 

Top performance changes often, but consistency is more stable.

Second — and note the ‘subtle’ difference — you should NOT focus on funds that will give ‘maximum’ returns but those that will ‘help you meet maximum of your financial goals and desires’.

Remember you are not in a contest where the winners will be rewarded. 

Rather, you are in competition with yourself to meet as many personal goals as possible. Your motivation should be to achieve ‘your’ milestones; not to make more returns than your neighbour or colleague.

Third, remaining invested doesn't mean to invest and forget. We have to monitor the portfolio.

But beware — this monitoring SHOULD NOT be done on a day-to-day basis. Reviewing and restructuring once every 3 months will be more than sufficient (unless there is some exceptional event in the interim).

Restructuring involves
a) Shifting from under-performers to better funds
b) Rebalancing the fund-wise exposure
c) Rebalancing the category-wise exposure
d) De-risking the portfolio by switching from High PE funds to Low PE funds
e) De-risking by switching from mid/small-cap and thematic funds to large-cap funds

Bottom-line: Choose funds that are best suited to realize YOUR financial dreams and intelligently NURTURE your portfolio.

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