Mutual fund investments in India have become more increasingly popular trend. But still a majority of Indians still have a big chunk of their savings locked up in their saving accounts, and their biggest investment is usually a house. Most people in India simply don’t have the knowledge or the time for investments. This is one reason mutual funds in India have become an emerging trend.
How to choose the best mutual fund for you?
Selecting a mutual funds can be a confusing & mind-boggling task. Let’s see, what you need to keep in mind while selecting the top mutual funds for yourself:
Choose a strong fund house: Before narrowing down you search to your preferred fund, select the fund houses which hold a firm goodwill in the market. These fund houses should have a strong presence and a promising and proven track record. A strong fund house will ensure efficient handling & management of your hard-earned money, thus bringing you sustained returns for a longer period of time.
Look for consistency: 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.
Risks and returns: Investments in most securities accompany a degree of risk and if returns aren’t in proportion to the risks taken, it’s not worth going for such investments. A good mutual fund is one which provides higher returns than others for an equivalent risk taken. Balancing these factors would help you maximize your returns by taking calculated risks. In order to do so, it is important that you analyze their risk tolerance.
Goal related to the investment: An investor usually wants to make sure that their savings enhance their ability to achieve their goals. The investment needs to be in sync with the tenure of the goal, this decides the type of mutual fund. If you’ve got a shorter tenure, picking debt funds is always a good option. For investors with medium-term lookout, balance funds with both debt and equity are a neat option. Long tenure investors can choose additional exposure to equity mutual funds.
Diversification of the fund: Mutual funds are presupposed to offer diversification across several different categories, sectors, stocks, gold, etc. A wide-ranging portfolio usually has a lower risk exposure than a portfolio based towards one particular sector, stock, or asset category.
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. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
