How to select mutual fund scheme-10 Ways
How to select mutual fund scheme? Start with your goals, with so many options available, it can be difficult for investors to choose the right fund.
Therefore, before starting a mutual fund investment, investors need to know some important facts to consider, so that they can choose quality Mutual Funds.
How to select a mutual fund scheme?
Remember that mutual fund investments offer much better returns than current bank fixed deposits.
1. As an investor, before starting any investment, you need to understand the investment objectives, risk level, duration of the investment and other financial requirements.
Avoid funds that do not suit your needs so that you can easily choose the right funds.
2. Understand early on that mutual funds are not always about equity and do not last long. Equity mutual funds are one of the most popular mutual funds.
There are balanced funds that invest in debt funds, liquid funds, bonds, and government securities, as well as some other types of mutual funds that have more or less exposure to the stock market.
If your goal and term are less than 1 year, liquid funds or ultra short-term debt funds are the best options to park your savings.
When choosing debt funds choose good mutual funds with quality working experience.
3. If you are investing in sector funds do not invest for short term. Sector funds are highly volatile and risky. Also, if you are new to mutual funds, avoid investing in sector funds.
4. There are two ways to invest in mutual funds SIP and Lump-Sum, depending on factors such as available savings, cash flow and source of income.
Understand that SIP mode is more suitable if you are a salaried person but if you are a business owner you may want to make a one-time investment.
5. ELSS funds are multi-cap funds, so it is recommended to invest in these funds for the long term. Also, learn how the lock-in period is calculated when you invest in ELSS via SIP mode.
When you invest in ELSS via SIP mode, it will be locked-in for 3 years each time. It is automatically locked for 3 years as each of your deposits is treated as a new one and you can also get income tax deduction of up to Rs 1,50000 through 80C.
6. Mutual funds with low NAVs do not always mean that they are good and cheap investments.
7. Sometimes investors are asked to suggest better dates for SIP. The best date for SIP is still not today. It is important to ensure that the money is available in the account on the given / indicated SIP date.
If you have money in your bank account at the end of the month, you can opt for SIP at the end of the month but if you think it is a good idea to invest at the beginning of each month, go ahead with it.
8. Avoid investing in retirement specific mutual fund schemes. Choose an equity diversified fund or a multi-cap fund or an index fund and invest for the long term.
9. Do not focus your investment on the same type of funds or on any one area. Diversify your investments in equity, debt and balanced funds according to your age, age and goals.
10. Go through a mentor for financial success. It is always recommended to go through a good advisor as this will protect you from losing or risking access to the wrong funds.