Starting mutual fund, SIP on Diwali, Muhurat Trading? 5 key numbers to know before investing for best returns

Diwali is considered an auspicious time to start new investments, plan for long-term wealth creation and put your finances in order. Several investors start a Systematic Investment Plan (SIP) in small-cap, mid-cap, flexi-cap or large-cap mutual funds or invest in stocks during the special ‘Muhurat trading session.’

The special Muhurat trading session will be held on 8 November, with a pre-open session from 2:05 PM to 2:20 PM and a normal/regular trading session from 2:20 PM to 3:30 PM. This will mark the beginning of Samvat 2083.

Here are five mutual fund metrics that evaluate a scheme’s cost, risk, consistency and potential to generate long-term returns.

Look beyond returns before starting your SIP

Investors should not select a mutual fund based on a single metric or a handful of basic checks. An investment scheme delivering higher 5-year returns may also have experienced higher volatility. Similarly, a low expense ratio does not automatically make a fund a better investment.

To ensure that your investment is best placed to provide meaningful returns in years to come, investors should check the fund manager’s track record, credentials, reputation, and the scheme’s composition; current portfolio holdings; core investment strategy; and performance across different market cycles.

Diwali and Muhurat trading provide an occasion to begin investing; still, they do not guarantee or provide any assurance of favourable market returns.

The best festive investment decision is not about finding the mutual fund that promises the highest possible returns, but about choosing the one whose costs, risks and investment strategy align with an individual investor’s long-term economic objectives.

Disclaimer: Mutual fund investments are subject to market risks. Past performance does not guarantee future returns. Investors should assess their financial goals, risk appetite and investment horizon and consult a qualified financial adviser before investing.