Wednesday 20 February 2019

Points to be Kept in the Mind While Investing in Mutual Funds

There are umpteen numbers of mutual schemes available in the market. The task of picking the right one is not a cake walk activity. Many investors are of the opinion that any mutual fund they pick delivers desired results but it is not so as each mutual fund scheme is unique and caters to certain risk profile and picking the winning mutual funds is a tough task as one has to take into account both quantitative and qualitative aspects.

It is therefore imperative to take advice and guidance of experienced Mutual Fund Agent while making the final decision. One has to keep in the mind few points that enable to make correct decision:

1. Investment objective and risk tolerance: One your way of selecting Best Performing Mutual Fund, assess your investment objective and risk tolerance. If your goal is to earn capital gains for more than a year, then go for long term mutual fund scheme where your money gets siphoned for a period of at least 1 year in case of equity and at least 36 months in case of debt mutual funds. But if your investment motto is to earn current income, you should go for short term schemes.

2. Performance consistency of mutual fund: Next important thing to be checked before investing in Mutual Funds India is the performance of the scheme over the long term basis. Check the performance of the scheme for the past 3 to 5 years instead of checking the returns the scheme has generated.

3. Compare mutual funds with others: Just by understanding the mutual fund scheme’s own performance is not enough. It is vital to check how it has performed among its peers. This gives a comprehensive understanding of the whole scheme. Keep in the mind that comparison should be made only among the same type of mutual fund say for e.g. large-cap mutual fund schemes should not be compared with multi-cap fund schemes. Check the quality ranking of the scheme that showcases the performance on quarter to quarter basis among its peer group.

4. Mutual fund’s expenses: All the expenses that go into managing mutual fund scheme should be borne by the scheme and so it is vital to check what proportion of returns earned by the scheme is taken away by its expenses. Check the expense ratio and lower ratio, better is the scheme.

5. Experience of the fund manager: Experience is the best teacher. This is a vital factor to consider before investing in a mutual fund scheme. See how long the fund manager has been in this work and check how he/she has managed the fund during the fund’s worst and best periods.

Visit the Following Page for More Information-
How beneficial is to Employ Experienced Investment Advisor

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