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What are the important points to be noted while investing in Mutual Funds?
Posted on: 26/Sep/2017 2:30:36 PM
It is highly recommended that the individuals interested in investing in mutual funds should be aware of certain basic factors regarding the same.
There is a recent positive trend in which the average prospective investors have started showing interest in the Mutual Funds apart from the usual Provident Fund and Small saving Avenues. With the recently declared reduction in the interest by the banks, many people have started looking at the alternatives including ‘Liquid Fund’ plans. It is also noted that the number of enquiries for clarifications regarding mutual funds has increased substantially in the newspapers.
Mutual funds are considered as one of the best options among the investment opportunities. There are different types of plans available in mutual funds.
For those interested in equal share investments, ‘Equity Mutual funds’ are ideal. For the people averse to high risks, there are many debt funds available.
For short-term investments, liquid funds and short-term bonds are leading. However, there is a situation where the prospective investors in mutual funds get anxious about the stock market rises and falls. So, those who are 1st-time investors in Mutual Funds, the experts advise that it is better to be aware of all the basic features about mutual funds.
There is no doubt that a mutual fund is an excellent option for investment. However, it is better to be aware of the various mutual fund plans and how they function. There are many ways to invest in Mutual Funds. One can invest through agents or invest direct. Otherwise, it is better to take help of a professional consultant. Prior to this, one as to be clear about the target or purpose.
In case you feel you have done a mistake while investing in a mutual fund, there is no need to panic about it! There will be another opportunity. So, do not withdraw in a hurry from your investment. You need to take a decision on quitting after considering the factors such as Exit Load and capital gains Taxation. A bit more patience may help avoid these expenses. There are no doubts that all investments must yield profits – including the mutual funds. However, it is not advisable to select the schemes with just profit as the main objective. It is not true that a scheme which yielded profits in the past will also yield profit in the future as well. Some schemed may be affected by fluctuations in the field of finance. It is best to have a long-term view on this.
In case a particular mutual fund has failed, it is better to analyse and know the reasons for the same. In a similar vein, it is better to know how certain other mutual funds yield profits. This knowledge will help assess better. Also, it is better not to seek opinions from all and sundry. This will lead to confusion.
Mutual funds are based on NAV – Net Asset Value. It is not necessary to monitor continuously. This s not like the stock market share prices. It is better to check periodically and compare it with the other equivalent schemes. There is no problem as long as the scheme yields the expected results. In case it fails, it is better to find the reasons and then take a decision.
