How to Choose the Best Mutual Fund for My Investment?
Mutual Funds are investments where two or more investors pool funds into an investment product. These funds are used as assets on investing in a group of assets to reach the fund’s investment goals. There are various types of mutual funds available and, for some investors, this wide universe of available products may seem overwhelming.
The first step to get into the stock market game is opening an online demat account. To a first-time investor, mutual funds may seem a bit overwhelming. It’s actually a lot easier than it looks if the investor is careful and plays safe. The easiest way to choose the ideal mutual fund for you is choosing the one that provides the best returns at a lower cost. But funds are even bigger “winners” when they strategically enhance your own portfolio and investing objectives. There are many ways to choose the right mutual funds for you. You can have a look at each fund’s performance history, and its management and investment ratios, expense ratios, etc.
Here are a few pointers that willhelp make your choice easier:
Assess your goals and risks
This is the primary step to be taken before investment. Assess your assets and savings accounts, and gauge how much you are willing to invest in mutual funds. You can also decide to invest in a single instance or through systematic monthly investment plans called as SIP’s. Risk assessment is another important factor while considering online share trading or investing in mutual fund. You should only invest surplus funds that you do not need in the immediate future at least for a year, and not all your savings. This ensures you don’t go into liquidity crises if the stock market falls . The time period of investment also should be decided in advance,like for how long the funds would be invested, when they will get liquidated, etc.
Type of fund
The investor should take on the risk of long-term investment onlyif his funds permit. If not then then he should stick to short-term investments. Long-term investments also hold greater returns over time because of theirhigh-risk factor. Short-term funds are often significantly less volatile, depending on the type of stocks in the portfolio or depending upon the category of mutual funds. Bond funds often have a low association to the stock market.
Look for a good management team
In this day of simple access to data, it shouldn’t be difficult to findinformationaboutyour portfolio manager. On the off chance that you wind up holding a mutual fund with a team that has practically no reputation or, surprisingly more dreadful – apast filled with enormous losses when the stock market has performed well –considerrunning as quick as you can the other way. The perfect circumstance is a firm that is established on at least one venture examiners,and has a team of capable and disciplined people, guaranteeing a smooth progress.
These are the factors one should keep in mind to choose the right mutual fund for investment.