How to choose Mutual Funds: Mutual funds are gradually becoming popular in India. Especially after the Corona epidemic, along with the investors of the stock market, the number of their customers has also increased rapidly.
Everyone has their own way of investing and saving. Where people invest, it mainly depends on how much risk they can take. Those who stay away from risk, they adopt the method of small savings schemes or bank FDs, while those who are not afraid of taking risks, turn to the stock market in search of good returns. In the last few years, the number of people investing money in the stock market in India has increased rapidly. Along with this, the demand for mutual funds has also increased.
These funds can be of great use
You too must have invested in mutual funds or seen friends doing so. Mutual funds not only provide inflation-beating returns, but also prove to be very helpful in meeting your financial goals in the long term. However, along with this, investing in mutual funds also has its own risk. In such a situation, the question arises that how to choose the right mutual fund, so that not only get good returns but also the investment is safe. Today we are going to tell you this.
Old performance doesn’t guarantee
The main thing that people pay attention to while choosing a mutual fund is the returns. It is not wrong either, but investing money just looking at the returns can be heavy. If a mutual fund has given good returns in the past, then it is not a guarantee that it will give good returns in future as well. Market experts often advise investors to avoid this mistake.
Avoid being influenced by anyone
The second biggest mistake investors make is getting carried away by the name. In today’s time, from Facebook to Instagram and YouTube, there are many such financial influencers, who are also called fininfluencers. Usually such people promote a particular mutual fund scheme due to vested interests. For this, he also uses influential figures. If you are also going to invest money in mutual funds, then it is important to avoid this mistake as well. Do not get influenced by any influencer or the names mentioned by him.
Check it out
It has become a matter of ‘what not to do’. Now let us tell you what exactly you have to do… The reason for the success of any mutual fund scheme is not the fund house or fund manager, but the secret of its excellent returns is hidden in its method. Before investing money in any mutual fund scheme, you should see what is its process. How the funds of the concerned scheme are to be used. After examining this thing thoroughly, it will be clear in front of you whether the related mutual fund scheme is useful for you or not.
For example, Nippon India Mutual Fund has put in place such robust systems and processes. Fund managers are required to work within this framework. Processes help fund managers know what to do in uncertain times. Though he cannot control the market movements, the processes help him to know where to invest, when to invest and when to exit.
Nippon’s process includes guidelines for fund managers to know what kind of risk they can take, how much risk is allowed and what risk should never be taken. This process also ensures avoidance of personal bias and concentration risks. Analysts believe that fund houses with robust processes potentially give higher returns to investors.
