Top Things to Consider when Investing in Mutual Funds

Posted by ryan on May 10th, 2019

Mutual funds have emerged to be one of the most preferred investment options in the recent years. Carefully choosing mutual funds can help investors double their wealth over the years. However, selecting the right mutual funds to invest in can be a tough task. This is the reason why you need to take the help of a financial advisor who can assist you in choosing the right products. In addition to taking the help of a financial advisor, there are a number of other factors that you need to consider when investing in mutual funds. Read on.

Review the Mutual Fund Scheme

The first step to select the right product is to review the mutual fund scheme. Investors need to recognize the broader investment style to earn profit in the long run. Look for a scheme which is aligned with your objective and is in line with the amount of risk you can take.

Check the Background of the Fund Manager

Make sure you check the background of the fund manager you have shortlisted. As you are entrusting your hard earned money, make sure you choose a competent and deserving advisor. Choose a fund manager with expertise in handling finances and a good track record with the investors.

Performance of the Fund

Check the past performance of the mutual fund before investing. However, past performance need not be the only parameter to choose a mutual fund. The reason is a fund that has performed well in the past may not perform the same way in future. Analyse the performance charts and tables to evaluate the risks they have faced in the past and Portfolio and its characteristics held in the past. A comparative study is also important to determine whether you are making the right decision.

Entry and Exit Load

Entry load is the charge that you use at the time of joining the fund and exit load is the charges that are levied when you sell the mutual fund after a particular tenure. The entry and exit load eats up your investment value as it is a fraction of NAV. This is the reason why it is important to invest in a fund with low entry and exit fund. Though the concept of entry load has been abolished in India, assessing the exit load is a must.

Last Few Words

Those were some of the important factors to consider when investing in a mutual fund. Choosing the right financial advisor is not enough; you also need to assess the points mentioned above to earn better returns in future.