The market is full of different schemes for investing your money and getting good returns. One of the most popular ways in the direct mutual fund platform. But, it is very important to strategize your investment according to your need and enjoy the better returns with a low level of risk. If you do not strategize your investment then it might be possible that you go into a loss. It is not as difficult as people think to make the strategy for your mutual funds, so here are five most common and most successful strategies to manage your mutual fund portfolio and gaining best returns with proper risk management.
1. The market timing management strategy
This is a very simple kind of strategy which includes the regular monitoring of the market and investing accordingly. The investor needs to get into the market and out of the market according to the market conditions. This strategy basically implies that the investor should always buy stocks at a lower price and sell them at a higher cost. This is mostly the opposite of what many investors do as they fall into the emotional decisions rather than using the logical strategy. This kind of strategy is very successful and easily managed and can be used to higher your investment returns without increasing the risk level.
2. The buy and hold investment strategy
The buy and hold strategy is the most commonly practiced out of all another kind of strategies and the reason behind it is that it is very easy to perform and you will gain good returns 75% of the time. This strategy basically implies the rule that the market is in good condition for 75% times and only goes down to 25% times. The investor only needs to buy and hold his funds and do nothing so he can get good returns 75% times. This is the easiest strategy to practice out of all and does not require any extra efforts.
3. The performance managing strategy
This kind of strategy comes somewhere between the market timing management strategy and the buy and hold investment strategy. In this kind of strategy, the investor needs to buy the funds once and let them perform for a while. After seeing the results in the first tenure, the investor can see the winner funds and the loser funds. And this is where the investor needs to change the plan and sell his best-performing winner funds to buy the worst performing loser funds. This may sound a little illogical but this is the right thing to do. This strategy works on the fact that the performance of the funds always runs into a cycle.
4. The No-strategy strategy
This is the simplest thing to do for those which have just started to buy and sell as an investor, it is not that easy to manage a mutual fund portfolio and run it according to a strategy. For those who do not have enough time to strategize their mutual fund investments, the best thing to do is to use this strategy. It is also known by the name of Wing-it strategy. The investor does not have any plan or structure for his investment portfolio and this type of investments usually have the least success rate.
5. They don’t give up strategy
This type of strategy basically implies for those who get scared of the market drop conditions. It has been seen that many long-term investors who give up on the funds when the market is going down but it is the biggest mistake that they can make. It should be kept in mind that the conditions of the market always keep changing and you should never give up on your funds even if you fall into some loss.