5 points to keep in mind while investing in Mutual Fund

The current market scenario is offering more than 3500 mutual fund investment schemes which make it a very challenging task for the investors to understand which scheme suits them the best. One needs to analyse both the qualitative as well as quantitative factors before determining the mutual funds investment for them.

However, before finalising an investment, you need to keep certain points in mind so that you don’t have to waste your hard earned money in non productive investments:

  1. Check Your Investment Objective

The first and foremost step before making a mutual funds investment should be checking of the ultimate goal as well as objective of the investment. Your financial objective can be just one or more. For eg you may need money for your retirement or your daughter’s wedding or buying a property. You are to precisely calculate the time on hand and the money to be invested.  This also makes the task of a financial advisor a lot easier.

  1. Always check the experience of the fund house and the fund manager

As an investor, you must always analyse the experience, growth and reputation of a fund house in which you’re ready to make the investment. You should always check the track record of the assigned fund manager who is running the fund. You should always check upon the experience and track record of the fund.
You may compare the scheme that has been recommended to you by the mutual fund advisor and other existing schemes.  This is vital information. You may also check with the mutual fund advisor if the fund house is investor-centric or profit centric. You may call up mutualfundwala.com to seek help.

  1. Check the Risk Analysis of the scheme

As the investor, you should never ignore the risk analysis upon the investment that you have made in the fund. The two major aspects that need to keep into consideration by the investor are to check upon the volatility of the fund as well as the risk-adjusted returns.  If your financial objective is over 7-10 years away, then you may consider investing in systematic investment plan. You may give all relevant information to the mutual fund advisor  and  only after correlating your investments, expected returns and financial goals, should you invest.

  1. Calculate the Tax Implications and Exit Loads.

It has been observed that most of the times the investors don’t heed the tax implications or the exit loads of their mutual fund schemes. Though, all equity schemes are tax free after 1 year. This calculus changes in case of SIP.  In a SIP, 1 year is Not calculated from the date of the start but from each investment. This is a very relevant point to be noted.

  1.  Look at market conditions.

Though, no one has been able to time the market however, you should be a little diligent while making the entry as well as exit from a mutual fund investment. For eg a lump sum investment done in last qtr of 2007 would have to wait for at least another 3-4 years to break even. Similarly, any exit in early 2009 would have been absolutely stupid. Always speak to an expert Mutual fund advisor for relevant inputs.


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