Mutual funds have become a good investment medium among small investors. After the Corona epidemic, the number of investors investing in it has increased rapidly. Today crores of investors are investing in mutual funds through SIP. The strong returns being received in mutual fund schemes are attracting investors. However, it is not that all mutual fund schemes are giving great returns. Many have also caused losses. Therefore, it is important to know some things before investing in any mutual fund scheme. By doing this you will be able to choose the right fund.
Know the risks of the scheme
Before investing in any mutual fund scheme, know which fund it is? Mutual fund schemes fall into the large cap, mid cap or small cap category. Along with this, find out in which stock your money is being invested. If money is being invested in mid-cap and small-cap then the risk is higher. Select the scheme according to your risk appetite. Investors should ensure that the fund manager is not allocating the scheme money to low-credit instruments.
Know the expense ratio and other charges
Select four or five funds from the segment of your choice like midcap, large-cap, debt or hybrid and then compare the expense ratios of the funds. Apart from this, if you withdraw the funds, then how much commission does the fund house charge you at the time of one time sale.
View past performance of the fund
The past performance of any mutual fund is no guarantee that the fund will perform well in the future. Looking at the track record of the fund, you can definitely compare its record with other schemes. For example, if a fund that has outperformed the index year-to-date may be a better bet.
Choose an Experience Fund Manager
One of the criteria for choosing a fund is to know who is managing the fund. Investors usually place bets on funds that are managed by fund managers who have previously shown the ability to manage investors’ money during market ups and downs and have shown discipline even during turbulent markets. This becomes very important for actively managed funds.
Fund review
As an investor, you must be clear about your financial goals. Always think about selecting a fund that will help you achieve your goals. For example, if the money is to be invested for a long period then debt fund investment should be avoided. Similarly, in the short term, suppose you have to make payments in the next three years, there is no point in taking equity funds as it can be very risky. If you want to prepare funds by investing for long term.
