Mutual funds are a great investment option. It gives higher returns than other investment schemes. It is considered safe to invest in this through SIP.
For some time now, the interest of investors towards mutual funds has increased. Investors are increasingly investing in it due to higher interest rates than FDs and other schemes. Especially the number of people investing through SIP is high. There is less risk in this. Apart from shares in mutual funds, money can also be invested in debt funds, gold and commodities. If you are also thinking of investing in this, then you should be aware of the special things related to it, it can double your profits.
How to choose mutual fund
Choose a mutual fund keeping in mind the purpose for which you want to invest in mutual funds. If you have to invest for a year or two, then there will be separate mutual funds for that. There are other options available for long term investment. Debt funds or liquid funds are better for short-term investments. Whereas equity mutual funds are beneficial for long term investments.
Don’t forget to check the fund’s past record
While choosing any mutual fund, it is very important to gather information about its past records. This will give you an idea of what percentage of returns the fund has given in the past. However, it is not guaranteed that the fund will perform well every time. These depend on the company of the fund and its fundamentals. You can also take the help of ratings given to these funds by different rating agencies for mutual fund selection.
Expense ratio should be less
While choosing a mutual fund, gather the details of the expenses associated with investing in it. These include entry and exit load, asset management charge, expense ratio etc. Generally, an expense ratio of up to 1.5 percent is considered right for a mutual fund, but investing in funds with an expense ratio higher than this should be avoided as it will give you less profit.
return and risk balance
The returns received in mutual funds depend on the performance of the market. There are ups and downs in it. So you have to decide how much risk you can take for investment. If you want to invest in equity mutual funds, then you cannot take the risk that the value of your investment may decline. Therefore, choose funds that have a balance between return and risk.
Check out the company
It is important to investigate the mutual fund scheme in which you are going to invest, how is the company bringing that scheme and its management team. Because how was its performance of other schemes, how is the company’s credit in the market. By getting all this information, you are more likely to benefit. For this, you can also check the portfolio of the company.
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