Posted byjaayraysPosted inmutual fundTags:Blue chip, BSE, equity mutual fund, investment, mutual fund, stocks, warren buffet
As the markets have fallen considerably due to the pandemic conditions there are frequent questions whether or not investment should be made in mutual funds, stocks etc.
As there is a saying, “History repeats itself”, the same is true with the equity markets, it may be SARS outbreak or Bird Flu outbreak, markets have always recovered from the downfall. In fact it is time to grab quality investment opportunity with both hands.
Most of the stock markets around the world, it may be Dow Jones, Nikkei , BSE, DAX etc. all have fallen considerably. During the great depression of the 1930’s people where also fearful but ultimately the hardships were removed and the markets, economies recovered from the Great depression.
So the question is where should we invest ? And how ?
Basically as the markets are quite volatile it will be advisable to invest in quality blue chip stocks or a blue chip mutual fund. The later one is preferred because the fund manager is always in a better position to select quality stocks in portfolio in an unbiased manner. Moreover the margin of safety is also there as the blue chip funds select only the stocks having good market stability, meaning they have surplus cash with them. As the great investor Mr. Warren Buffet has quoted
“ The three most important words in investing……Margin of safety”
– Warren Buffet
So you should select a quality equity mutual fund scheme with these parameters-
- Investing in blue chip stocks having high cash reserves.
- Scheme having low expense ratio. Expense ratio is defined as the percentage of fund assets for running the mutual fund which includes administrative and other operating expenses. In short it is amount charged by asset management companies for running a mutual fund.
- Good track record of the fund manager. It is particularly important as you are assigning the person to take care of your hard earned money, he is responsible to take investment calls on your behalf.
- Past performance of the fund needs to be checked. The scheme normally outperforms the market whenever the Bull markets are there as most of the companies valuation increases during those conditions. You need to check the fund performance during both bull market and bear market.
- Finally we need to check the star ratings provided by the various rating agencies. A good scheme normally has 4 or 5 star ratings which suggests that is as per market trend a good scheme.
If a scheme satisfies the above criteria then you are ready to go for the investment. But one thing needs to be understood that although we have considered every criteria still it may happen that our investment won’t give us good returns, in such case we need to be patient and follow what the smart investor does
“Be fearful when the others are greedy and greedy when others are fearful”
– Warren Buffet
If you wish to invest in mutual fund then click here
Disclaimer – The information mentioned here are personal and no information on this site should be used for investment decision.
Published by jaayrays
Being an electrical engineer, blogger, I am here to enhance your lives!View more posts
Interesting
LikeLiked by 1 person
Thank you
LikeLiked by 1 person
Thank you for such a wonderful article. I love the concept of Margin of Safety, and Buffet’s quote you have added.
The content is wonderfully written as well! I really love your opinion and your writing style.
I enjoy your work so much that I have subscribed to your blog. 🙂LikeLike
Thank you very much. Happy that you found this article useful.
LikeLiked by 1 person
Thanks sir share this information. I really. I really love this post.. one the best blog share the Unique knowledge . Thanks you so much..
LikeLiked by 1 person
It’s my pleasure that you found the article useful
LikeLike
Good points I’ll be doing some research on blue chip stocks to add to my portfolio.
LikeLike
Happy that you found this information useful
LikeLike
Always think outside the Box and embrace opportunities that appear, like Goldario.
LikeLike
Leave a comment
This site uses Akismet to reduce spam. Learn how your comment data is processed.