mutual fund in India has become more increasingly popular trend, most people in India simply don’t have the knowledge or the time for such investments. Before you decide on the
best mutual fund in India for you, it is extremely critical that you analyze the pros & cons of every option available for your financial planning
How to invest in mutual funds?
Here are a few tips to keep in mind while
investing in Mutual funds:
- Choose your fund house for purchasing the mutual funds by carefully doing your research and taking tips from your friends or family who have done similar investments. A careful research is key to selecting the best fund for you. It is important to monitor the portfolio & performance of the mutual fund.
- Determine your risk tolerance and if returns aren't in proportion to the risks taken, it's not advisable to go for such investments. An ideal fund is one that provides relatively good returns than its peers for an equivalent amount of risk taken. Balancing these factors can help you maximize returns by taking calculated risks. For this, it is important for you to analyze your risk tolerance.
- Imply overall diversification to your funds. By its nature, mutual funds have an inherent characteristic of diversification across completely different categories. A wider portfolio has lower risk than a portfolio based on a specific stock, asset category or a particular sector.
- Do not try to time the market. Even the best professionals in the business cannot time the market reliably. In the short term, fluctuations in the market will not really affect you much, since most people usually make investments for longer periods of time.
- Never try to make investments on the basis of short-term returns of a fund. These numbers are generally misleading and you as an investor, might end up with a burn in your pocket. Always assess long term returns of a fund for determining the performance of a fund.
- Mutual funds are offered in variety of classes, each class of share has a different structure for fees including deferred charges, sales charges, up-front sales charges, etc. The kind of share class you choose will ultimately depend on your desired duration for investment.
- Look for consistency in performance, before investing it is advisable to look for consistency in the performance of a fund over longer tenures like 4-10 years, rather than short term returns. Then it will be easier for you to select schemes that beat their benchmark indices and compare easily with their competitors.
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual and statistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-party sources, which are deemed to be reliable. It may be noted that since RNAM has not independently verified the accuracy or authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and information has been processed or arrived at; RNAM does not in any manner assures the accuracy or authenticity of such data and information. Some of the statements & assertions contained in these materials may reflect RNAM’s views or opinions, which in turn may have been formed on the basis of such data or information.
Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.