The investor is always
trying to invest in the best mutual funds. There are various numbers of mutual
funds that have listed themselves as one of the best mutual funds. But based on
diverse analysis and risk appetite, one has to make brilliant decisions to
choose the right mutual funds. Every investor needs to consider a few things to
find the right mutual funds. Some important things to keep in mind
before selecting a mutual fund:
Properly defined objectives: Before investing, there should be adequately
defined objectives for any mutual fund investor. A shareholder knows that it is
likely to invest in the short or long term. Any mutual fund investor, for
example, is expected to buy a new vehicle in the future, go on vacation, or buy
a new device. Invest in a mutual funds an investment time must be
pre-determined. A long-term investor may look at long-term goals such as
retirement plans, children's education, or property acquisition.
Select mutual fund category: The mutual funds come under various types for
different investors. Every investor should look at their risk appetite and
their pre-determined investment goals. Here are the list and estimated returns
for mutual funds.
- Short
term fund: ideal period for 1-3 years
and you will get 8-10% expected return.
- Income
Funds: ideal period for 1-3 years
and you will get an 8-10% expected return.
- Debt
oriented balanced fund:
ideal period for 2-3 years and you will get 7.5%- 12% expected return.
- Equity
oriented balanced Fund:
ideal period for 2-3 years and you will get 10-15% expected return.
- ELSS
Funds: ideal period for three years
(minimum) and you will get 15-20% expected return.
- Large-cap
fund: ideal term for 4+ years and
you will get 12-18% expected return.
- Mid-cap
funds: ideal term for 6+ years and
you will get 15-20% expected return.
- Small-cap
funds: ideal term for 7+ years and
you will get 15-20% expected return.
- Multi-cap
Funds: ideal term for 8+ years and
you will get 15-20% expected the return.
- Sector
funds: ideal term for seven years
and you will get variable expected returns.
Investment Type: Make sure that after selecting a mutual
fund, the investor has to look at various options to invest. In India, there
are two main ways to invest in mutual funds:
Lump-sum: Investments in a lump sum define as an investment of a single
amount at a time. One invests money in this type of investment indefinitely in
a year.
·
Systematic Investment Plan: In the case of SIP, a fixed amount is
invested regularly in mutual funds. This amount will automatically deduct as
soon as you start the bill.
Mutual Fund Options: An investor should choose a form of mutual
fund for investment after choosing the investment process. To diversify their
investments, one needs to accept one or more funds to invest. Before selecting
any direct
mutual fund,
make sure to check their ratings.
Many investors are
looking for a variety of schemes for diversification of mutual funds. To fund
their plan, they choose small, large, or medium funds. A diversified portfolio
can reduce the risk of loss in a sector. When choosing a scheme, the most
important thing to note is to select a plan that suits your risk profile.
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