Things To Consider While Choosing The Right Mutual Fund Schemes

Things to Consider While Choosing the Right Mutual Fund Schemes

by

Govindan

Amongst all mutual fund schemes it is difficult to choose the right one. There are more than 25 to 30 popular finding houses in the market, and it is becomes all the more difficult to choose the best one. Market is always volatile as we all know and it is difficult to find which is the appropriate and the best fund house and the best scheme that they offer.

There are lots of important aspects that you will need to consider before investing your money in mutual funds. Top rated fund houses may not have the best schemes according to your requirements. Some look forward to short term plans whereas some look ahead towards long term investments. It is crucial to understand various aspects of individual mutual fund schemes and then decide the one which suits your requirement. How is the fund house conducting in the market? You also need to check how transparent the operations are. Financial advisors suggest investors to focus on the functioning of the fund houses and not on what percentage they are giving. Successful investors evaluate the past performances and then invest mutual funds. Mutual funds and stocks have their own personality which can be judged through their past performances. Knowing the right personality of mutual funds can help even a layman to choose the right scheme. Get your basics strong before making your investment choices. Investment choices will largely depend on your risk appetite, age, time horizon and mainly your investment objectives. Selecting the right scheme category and the right mutual fund is the next step. You will also need to evaluate the portfolio of mutual fund. There are different types of mutual fund schemes. Some of them have high risks whereas some have medium risk. Looking at the risks and critically analyzing it will always help an investor to make a better decision. If you are aware of the risks involved and investing your money, then it is a fair game. However, if you are unaware of the sudden change in the tactics of the fund, then it may hurt you. Portfolio of a scheme is therefore very important to check before you invest mutual funds. Portfolio gives you an idea of which scheme has top quality stocks and which are ones are exposed to mid-cap companies. If you are an aggressive investor, you may like to invest in funds with high risks. On the contrary a conservative investor will always analyze on the risk factor before investing money. You will need to asses your own situation and risk bearing capacity. People invest mutual funds to save tax deductions. Tax saving schemes have 3 years lock-in period whereas regular income schemes are flexible. Short-term investment plans are usually from one to six months. If you need capital appreciation then the money should go in balanced funds for minimum of 3 years. You can expect consistent returns from good equity funds. Analyzing the equity fund, fund manager’s style of investment, expense ration, volatility and fund manager’s experience is crucial for an investor. However, there have been exceptional years when the returns have got altered drastically. Investing in mutual fund schemes is much more than giving the check and signing an application form. Select wisely and monitor them time to time.

Best

Mutual fund schemes

– fixed maturity plan, exchange traded fund, debt mutual fund and

tax mutual funds

.

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Things to Consider While Choosing the Right Mutual Fund Schemes