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How to select the right Mutual Fund Scheme?
Posted on: 21/Jun/2017 6:05:59 PM
Individuals who are not keen on investments in stock market/shares can better invest in mutual fund schemes and earn profits. At the same time, there may be occasions to incur some loss as well. This depends on the stock market situation.
For those who are interested in investing in mutual funds, it is very important to go through the investment-related documents in detail and know about it.
Types of schemes in mutual funds:
There are many types of schemes in mutual fund investment – revenue plans, liquid plans, tax-saving plan, and share investment plan are a few.
It is worth knowing the details and the related factors selecting the optimum plan as per the planned amount of investment.
Selection process:
The selection of mutual fund to invest can be made depending on the investment amount and the element of risk involved.
It is best to understand that investment in the mutual fund is almost identical to investment in the share market.
Once selecting the mutual fund, study its performance and position and compare it with other mutual funds. This study will give an idea about the performance skills of the mutual fund administrators. However, please beware that past performance cannot be considered as a guarantee to future success.
Credit rating:
Check the credit rating. The mutual fund which has the best credit rating is the safe one for investment.
Stock market investment plans:
When selecting this option, it is better to study all details about this portfolio. In case some difficulties are noted, it would be better to consult the experts in the field and take a decision.
Look and study the details:
Most of the mutual funds have their own websites. The website will contain all details. Otherwise, visit the website of AMFiI – Association of Mutual Funds in India. Also, visit SEBI website to know more about mutual funds.
Net Asset Value:
Some investors prefer to invest in the plans where NAV (Net Asset Value) is lower rather than higher. The investor must be aware there is no connection whatsoever between higher, lower, or equal NAV.
Asset Allocation:
Asset allocations must be made depending on the duration of the plan, the risk factor, and the basic aim of the investment.
However, you can make changes according to the prevailing stock market situation.
Other factors:
Other factors for selection of mutual fund for investment include – performance efficiency of the mutual fund, the service standards, and management. Another factor is the impact between the time of joining the mutual fund and the time of leaving it.
