Get basics right: Stick to mainstream funds for the long term

The Economic Times Wealth has carried a series of interesting articles in their issue dated 26 December 2011 - 1 Jan 2012. Here is an excerpt from some of their articles :

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The Sensex has lost almost 25 percent since the start of the year, the rupee has depreciated by 18.5 percent against the dollar while inflation surged to double-digits. Clearly, investors are curious to know what is the fate of the markets is in 2012 and where to invest. Read below to get an idea.

• How to invest in equity funds

With the stock market taking a severe beating, the net asset values of most equity funds have reported a steady erosion through the year. Investing in an SIP-based plan could not save investors as they still ended with negative returns (in spite of the fact that they acquired more units at lower prices). Looking at the uncertainty in the current scenario, its important for investors to leave decision making to fund managers and not pick stocks on their own. Also, most investors tend to take rash decisions like stopping SIPs. It is best to go back to basics and invest in mainstream funds. Click here to find out how one should invest.

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• Go for short term debt funds

The fall in markets has promoted a lot of investors to opt for debt funds as the best performing short-term debt funds, income and gilt funds, have delivered double-digit returns of over 10 percent and 11-12 percent, respectively over the past year, said ET Wealth. While equity markets will remain volatile in 2012, debt is expected to continue to steal the show. Read here to find out more.

• Will gold shine in 2012 too?

The yellow metal has been one of the best performing asset class this year as it rose by an astounding 32.6 percent against the Sensex, which fell by 25.2 percent. But what is the outlook for gold? Will it continue to rise or will it fall? Experts are divided on their opinion as some say that it will cross $2,000 an ounce while others argue that it may move in the opposite direction and drop as low as $1,450. Find out more here.

• Financial Lessons of 2011

As the year 2011 comes to an end, there are some important financial lessons to be learnt. The ET Wealth has carried a list of eight important lessons that small investors could look at like ‘diversification really works’ , or ‘insure against natural disaster’ or ‘stay away from easy money plans’ or ‘shun stocks with too much debt’ or ‘asset allocation is the key’. Click here to read the rest.

While most investors would like to forget the year 2011 as a bad dream, they are still wondering what lies ahead in 2012? As several blue chips like SBI and L&T have fallen to their two-year lows, will this be the right time to go bottom fishing? Read more here .