Is it the Right Time to Invest in Mutual Funds? | Kotak Securities (2024)

Why is Timing Important in Mutual Funds?

Your returns depend on the stock market if you invest in a mutual fund with heavy equity exposure. The Net Asset Value (NAV) of your mutual fund will increase if the market rises. As a result, if you can time your entry into and exit from a fund based on the market's circ*mstances, you can earn the best returns.

Nobody, however, can forecast market fluctuations precisely. Having said that, it is crucial to monitor the investments carefully. A yearly portfolio review may assist you determine the direction of your investments and whether you need to make any course corrections.

What is the Right Time to Invest in Mutual Funds?

There is no "best time to invest in mutual funds”. Mutual fund investments are not subject to any time restrictions or modalities. This suggests that you can invest whenever you like and in whatever way you like. For instance, you can invest in a lump sum if you have a fund corpus. However, if you want to invest a small amount on a monthly basis, you can choose the SIP (Systematic Investment Plans) option. Three perfect situations where buying mutual funds makes sense are as follows:

a. Bond rates are rising to their highest levels.

b. Stock markets have reached their all-time lows.

c. The real estate sectors are growing.

According to experts, you should think about buying mutual funds when their NAV (Net Asset Value) is lower than their unit price. This will assist you to maximise your returns. Additionally, you should think about investing when the markets are at their lowest point. You can then purchase the shares at lower prices. Mutual fund returns will be higher in the medium run if you invest during a bearish phase in the market. In contrast, if you are certain that mutual funds are right for you, you shouldn't wait for the "best time to invest". In most cases, it won't come and waiting could cost you money.

Factors that Impact the Best Time to Invest in Mutual Funds

There are a key factors you should which can impact the time to invest in mutual funds. This will help you to find out when to invest in mutual funds.

1. Purpose of Investment

You can determine the type of mutual fund you should invest in by defining your investing objectives. Even while the rate of return on low-risk investments may not be as great as that on high-risk ones, if the objective of your investments is to save money, you will be willing to consider them. In this situation, investments that are less risky than stock funds or aggressive bond funds would be low-risk money market funds or government bonds.

However, if your investment objective is to generate large returns, you must be willing to take on more risk and may want to consider investing in high-yield bond and stock funds.

2. Investments Horizon

Your investment horizon is the length of time you are prepared to put money into mutual funds. This can range from a few days to several years. With the exception of ELSS plans, mutual funds do not have a lock-in period. However, remember, short-term performance cannot be used to evaluate the performance of the entire fund.

Investment horizons should typically be between three and five years, or a full market cycle. The investor has adequate time to assess the fund's productivity and decide whether to keep going with the current plan or invest in a different one.

3. Risk Appetite

An investor's investment size and time frame rely on his or her risk profile. There are different mutual fund types focused on different types of assets. The risk factor for every asset class varies greatly. Based on your risk tolerance you can decide which funds to invest in.

4. Market Positioning

Investors who want to avoid risk can consider investing after the market has recovered. The markets attempt to make up for the losses they have suffered after a decline. Investors who are willing to take on a lot of risk can invest at any time since they will profit from all the downtrends and market cycles.

5. Return on Investment

Equity investments are appropriate for investors who are willing to take on significant risks in exchange for great returns. Investors might make a lump sum investment in mutual funds if they have a sizable amount of funds. They may invest in SIPs if they are prepared to put aside a fixed sum on a monthly basis. For both of these, the investor must hold the investment for a minimum of three to five years in order to receive high returns.

6. The Tax Benefits You can avail

While deciding when to invest in mutual funds, consider your existing financial stability as well as the additional tax liability incurred by mutual funds. So, the type of fund you choose also becomes crucial. Instead of dividend-bearing funds, which raise the investor's taxable income each year, funds providing capital gains are a superior option for lowering tax obligations. There are investment options that are especially created to offer tax-efficiency, such as tax-free municipal bonds and government bonds.

Additionally, taxpayers may get deductions of up to Rs 1.5 lakh in taxes annually under Section 80C of the Income Tax Act of 1961. Fund houses offer tax-saving options under the ELSS program. The mutual fund schemes have a three-year lock-in term, which is the shortest of all the options. You can invest in them through any reputed financial firms like Kotak Securities.


There are no ground rules defining the best time to invest in mutual funds. You should always try to leverage the power of compounding. So, the earlier you begin, the more you gain. Mutual funds are the best investment tool for beginners or who lack time to do in-depth research. It is safe to say that there has never been a better moment to invest in mutual funds for those who view them as a long-term endeavour.

In India, there are more than 2600 mutual fund programmes and more than 43 Asset Management Companies (AMCs). Reputed firms like Kotak Securities offer the best mutual funds in India. Depending on your investment goals, risk tolerance, time horizon, and tax benefits available, you can begin investing in appropriate funds. You can also seek the assistance of qualified financial experts to make appropriate decisions.

Is it the Right Time to Invest in Mutual Funds? | Kotak Securities (2024)


Is it a good time to invest in mutual funds right now? ›

There is no better time to start investing. It is very difficult to time the markets and although the markets are due for a correction, it would not be wise to wait further. Also, when it comes to SIPs, there is not much merit in timing the markets. We would suggest you invest in different mutual fund categories.

Is it risky to invest in mutual funds now? ›

In the category of market-linked securities, mutual funds are a relatively safe investment. There are risks involved but those can be ascertained by conducting proper due diligence.

Is 2024 a good time to invest in mutual funds? ›

Mutual fund advisors have been recommending investing in large cap schemes in the coming year. They believe that the large cap category may do well as the market is entering into the expensive territory. They say that the stock market is at an all-time high and the market is likely to become volatile.

Is it OK to invest in mutual funds when the market is down? ›

But it's important to keep investing money even if the market is dropping. Seems backwards, doesn't it? Think of it this way: When the market drops, your mutual fund shares are on sale—you're getting them for a lower price because the market is down. It's the time to buy—not sell.

How long should you keep money in a mutual fund? ›

Mutual funds have sales charges, and that can take a big bite out of your return in the short run. To mitigate the impact of these charges, an investment horizon of at least five years is ideal.

Which mutual fund is best to invest now? ›

  • Bank of India Flexi Cap Fund Direct Growth. ...
  • Quant Flexi Cap Fund Growth Option Direct Plan. ...
  • JM Flexicap Fund (Direct) Growth Option. ...
  • Motilal Oswal Flexicap Fund Direct Plan Growth. ...
  • ITI Flexi Cap Fund Direct Growth. ...
  • Invesco India Flexi Cap Fund Direct Growth. ...
  • Franklin India Flexi Cap Fund Direct Growth.

Who should not invest in mutual funds? ›

Mutual funds are managed and therefore not ideal for investors who would rather have total control over their holdings. Due to rules and regulations, many funds may generate diluted returns, which could limit potential profits.

Can mutual funds go to zero? ›

The chances of a mutual fund becoming zero are very low. This is because a mutual fund invests in several assets. So, even if a few assets do not perform well, other assets can generate returns. This can balance the losses of non-performing assets.

Which is the safest mutual fund? ›

Top 10 Low Risk Mutual Funds to Buy in the Share Market in India...
  • Bank of India Overnight Fund.
  • Mirae Asset Overnight Fund.
  • Axis Overnight Fund.
  • Kotak Equity Arbitrage Fund.
  • Tata Arbitrage Fund.
  • Nippon India Arbitrage Fund.
  • Axis Arbitrage Fund.
  • Aditya Birla Sun Life Arbitrage Fund.
Mar 7, 2024

What if I invest $1,000 a month in mutual funds for 20 years? ›

If you invest Rs 1000 for 20 years , if we assume 12 % return , you would get Approx Rs 9.2 lakhs. Invested amount Rs 2.4 Lakh.

What if I invest $1,000 in mutual funds for 10 years? ›

(You must convert the rate of return to the monthly figure through dividing by 12). You also have n = 10 years or 120 months. FV = Rs 1,84,170. So, the future value of a SIP investment of Rs 1,000 per month for 10 years at an estimated rate of return of 8% is Rs 1,84,170.

When should I stop investing in mutual funds? ›

When it comes to equity, it is very important that, especially when you are thinking about long-term goals, you want to exit as soon as you have 2-3 years left approaching your goal and there are just 2-3 years to get there. That is number one.

What happens to mutual funds if the market crashes? ›

Due to this, mutual funds offer you the benefit of diversification. However, during a market crash, stock prices come down. This, in turn, pulls down the performance of mutual funds holding these stocks. Companies, too, face a tough time with their operations taking a hit, and it takes time for stocks to recover.

Why are all mutual funds going down? ›

Because of the year-end many investors started booking profits and cutting back on fresh purchases to balance their book of accounts. So, demand reduced. Secondly, the Reserve Bank of India (RBI) started coming down hard on non-banking finance companies (NBFCs), which were a major source of stock market funds.

Why do people not invest in mutual funds? ›

As the funds are invested in market instruments, they carry certain stock market risks like volatility, fall in share prices etc., which deters us from investing in mutual funds. As we don't want to lose money, we often let it stagnate in our savings accounts.

Which are the best mutual funds to invest in 2024? ›

Most Popular Fund Houses
  • ICICI Prudential Mutual Fund.
  • SBI Mutual Fund.
  • HDFC Mutual Fund.
  • Kotak Mutual Fund.
  • Aditya Birla Mutual Fund.
  • Nippon India Mutual Fund.
  • Axis Mutual Fund.
3 days ago

Is IT a good time to invest in large cap funds? ›

Long-term growth: While offering lower potential returns than mid-cap and small-cap funds, large-cap funds can still provide consistent long-term growth over time. This is due to the established track record and stability of the companies they invest in."

Is investing money in mutual funds good or should I go for stocks? ›

Mutual funds are generally considered a safer investment than stocks because they offer built-in diversification—something that helps mitigate the risk and volatility in your portfolio.

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