How to Select Funds if You Are a Beginner?
Investments involve risk no matter what kind of investment it is, talking about mutual funds, they are always subject to market risk. This is the reason that a layman needs to be cautious while investing in them. Parking your money in mutual fund schemes without knowledge can lead you through a roller coaster ride which might give you a shock. In this article you will get to read about the dos and don’ts that any one investing for the first time should know for a happy investing experience.
Mutual fund investment market is full of plethora of schemes to meet the diverse needs of investors in today’s changing world. All an investor should be aware of is the right way to select the correct investment choice for their portfolio. So, below we are discussing the points you should be clear about related to your own portfolio before moving further towards selecting a scheme.
Know Your Portfolio’s Requirement
It is important that you should understand what you need before you go on to select the right investment product. If you are unaware about the investment requirements, then you might feel lost and confused no matter which scheme you come across. Below are the points for which you should have the answer while you search.
- Investment Amount - First and foremost thing is that you should be aware of is the amount that you are willing to invest. You may invest in mutual funds with amount as low as Rs. 100.
- Mode of Investment - There are generally two modes of investment in mutual funds which are lumpsum and SIP. While in lumpsum you have to pay the investment amount once following which you can enjoy the maturity amount when the date arrives, the other is SIP or Systematic Investment Plan in which all you need to do is invest regularly with the fixed amount that you chose to invest.
- Investment Duration - There are a number of schemes to select from and to be more clear about which one to select you should know the investment duration for which you are ready to park your money. While for long-term investment, equity funds are the best option, for short and medium term, funds investing in debt and money market instruments are considered more suitable.
- Risk Appetite - Each fund has a particular risk factor associated with it. The risk can be high, moderate, or low. It is really important that you understand well that how much risk you are willing to take. For example, if you are ready to take high risk, then you would be suggested equity funds while schemes investing in money market instruments and debt will be suggested to the investors with low and moderate risk appetite.
- Specific Fund House Choice - There are a number of fund houses that are present in the market today with a platter showcasing different schemes for distinct investors. Be sure whose schemes you want to invest in for example Reliance Mutual Fund, Aditya Birla Sun Life Mutual Fund, Kotak Mahindra Mutual Fund, etc.
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Dos and Don’t When Selecting Funds As a Layman
Here are the bullets indicating what you should and what you shouldn’t do if you are investing for the first time or have absolutely no idea about mutual funds.
Dos
- Go through the past performance of the schemes well.
- You should be aware about the scheme’s risk management.
- Make sure that the fund manager is highly experienced and qualified.
- See if the assets/sectors/companies/industry that has been chosen for investment are the ones which are likely to generate good returns considering the market conditions.
- The scheme that you select should be in accordance to your portfolio’s requirement.
- In case you have any confusion regarding invest, you should consult a financial expert.
Don’t
- Don’t invest in a scheme without researching about the same.
- Don’t add an equity scheme to you portfolio if you are a conservative investor as the risk involvement in such schemes is very high.
- Don’t finalize a scheme only on the basis of its past performance as the mutual fund market is volatile and the returns may differ from time to time.
- You don’t need to time the market if you are investing through SIP mode of mutual fund for long-term period.
Invest in the Best Mutual Funds
- 100% Paperless
- No Transaction Charges
- Easy to Invest
- Safe & Secure
When and Why Should You Consider an Expert
Whether you need an expert’s help or not depends on the fact that how well you have researched or are sure about the selected scheme for investment. If you have confusion, then it is very much advisable that you consult a good financial expert who guide you through the selection procedure. Although mutual funds investment has a number of factors for an individual to understand, it might be almost impossible to learn everything at once. To new investors, it is advised that they should consider a financial expert as this will not only help them in understanding the basics but at the same time will help them to start investment with the right fund selection.
Conclusion
Investing in mutual funds is a good choice for investors as it helps them in earning well over time with balanced risk compared to investments made in the stock market. If you are investing for the first time, then you made invest through our platform MySIPonline, a stop shop for all your mutual fund investment requirements. You can not only select the schemes of top AMCs but can also use various calculators such as SIP calculator, Tax Calculator, etc. For any help you can contact the financial experts anytime and can even post any query related to regular funds here.
Must Read:
Best Funds
| Top funds | 1M Return | 6M Return | 1Y Return | 3Y Return | 5Y Return |
|
|
|---|---|---|---|---|---|---|---|
| Axis Bluechip Fund - Regular Plan - Growth | 1.76% | 16.15% | 33.35% | 10.66% | 15.85% | Invest | |
| Canara Robeco Emerging Equities - Regular Plan - Growth Option | 2.83% | 24.46% | 42.78% | 18.75% | 24.33% | Invest | |
| Mirae Asset Large Cap Fund - Growth Plan | 1.3% | 17.52% | 29.43% | 14.13% | 18% | Invest |