"Earning money is good but investing it so that it can multiply is even better"
Mutual Fund investment has become a popular option for people to invest money and churn out huge revenues out of it. Do you know that choosing the right mutual fund may make you double the returns, however investing in a wrong mutual fund may result in losing the money? In all this, the trick of making money lies in choosing the right mutual fund.
Since there are so many options and mutual fund schemes in India. Choosing the right one can be a daunting task. But if you are planning to invest money here and want to find a good scheme then, in this article, you will get to know various points that must be considered before choosing and investing in mutual funds.
Points to consider before investing in mutual funds:-
1. Holding duration-
The first thing that you should take into consideration before investing in the best mutual fund is the holding duration. Different types of mutual funds have their own risks as per their holding period. If one fails to invest as per the required duration, then it may result in losing money and the mutual fund may not give you the desired returns.
2. Evaluating Assent under Management
If you are planning to invest money in best mutual funds then, as a wise investor, you must evaluate the asset size. The larger asset size builds the confidence of the investor because it shows that many people trust or have already invested in a particular asset. But, an important point to note here is that there is no direct association between asset size and return.
3. Debt Funds are not Risk-free investments
Debt Funds are not a risk-free investment. There is a risk of rising interest rate on debt funds fixed rate portfolio which in turn reduces the value of underlying securities.
4. Volatility Measure
It is important that one must check the return that the mutual fund is providing at different points of time as compared to the benchmark time. It helps in knowing the volatility of the funds in comparison to other funds of the same category.
5. Analysing the portfolio of fund manager
If you are planning to invest in a mutual fund then you must know that digging deep about the fund manager is important. Knowing about the portfolio of the fund manager helps you understand how trustworthy a particular fund is, how good the returns were under a particular fund manager, thus making it easy for you to invest.
6. Early investment is a good decision
Today the scenario has changed, young individuals have become more edified about their investment and here mutual fund emerges as a good option. As a young investor if you start investing at a younger age and stay for long in the market then the investment is less risky and you get more money over a period of time. Compounding interest will yield more money over a longer period of time, thus making your investment profitable.