DUTIES OF AN INDIVIDUAL AS A MUTUAL FUND INVESTOR

By Ashish Kyal – 

In the previous article we discussed about the rights of the individual as a mutual fund investor which SEBI as provided in order to safeguard their interest as an investor. But along with this right there are certain duties which the investors has to fulfill in order to ensure good returns from their investment. As the AMCs are obligated to fulfill their duties similarly the investors should also fulfill this duties to gain good returns from their investment.

Here are some duties of an individual as an mutual fund investor.

  • Read the scheme related documents carefully: While investing in a mutual fund scheme it become extremely important that an individual should read all documents related to the mutual fund scheme as this documents provides detail information about the scheme such as level of risk involved in the scheme, sectors in which the fund will be allocated, detailed information about the fund managers, past performance and other important information. Hence if the investor goes through this documents properly he/she decide whether to invest in the scheme or not.
  • Be updated: Only going through the offer documents is not enough to make the investment profitable it is necessary that the investor should keep himself updated about the scheme in which he/she has put their money in. It is necessary to be updated because sometimes the fund managers may change the entire structure of the scheme which can affect the returns of the investor. Even Sebi may impose some new rules or remove some existing rules which can affect the investment of the investor either in a positive or a negative way. Therefore buy keep such updates investor can decide whether they should stay invested or should exit from the scheme.
  • Provide all the important information to mutual fund adviser: An investor should provide some important information such as financial status, investment goals, and risk tolerance to your advisor after getting all this information your mutual fund advisors would be able to recommend you an appropriate scheme.
  • Should know his risk appetite: before making any investment it is necessary that the individual should know his risk appetite. Risk appetite refer to the amount of risk that an investor can take. If an investor has a low risk appetite it is advisable to invest in balance fund or debt fund has the level of risk in this funds are quite less than the Growth scheme or hybrid scheme. If the investor with low risk appetite opts for growth fund then in such case he/she me face some loss because in such scheme along with the risk factor the level of volatility is also high and the investor may panic in such situation and may face huge loss.
  • Keep sufficient amount of money in your bank account: It becomes extremely important to keep a certain amount of money in bank when an individual start an SIP and links his bank account for paying every month SIP.

 

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