Best Things to Keep in Mind Before Buy Mutual Funds
Best Things to Keep in Mind Before Buy Mutual Funds
In the absence of information, people often forget to take care of small but important things while buying mutual funds.
According to the law of business, it is assumed that the buyer is always careful. While buying the buyer has bought a good only after knowing all the things.
That’s why the buyer should always be careful. Any person is planning to invest the capital of his savings out of earnings in Mutual Funds or say that any person should invest in Mutual Funds.
While buying the fund, information must require at certain points, and a decision should be taken.
Few things keep in mind before buying mutual funds
Investors should keep the following things in mind while buy mutual funds.
- While buying a mutual fund, the investor has to keep in mind that the age of the mutual fund he is interested in buying is (440 08040). The brightness of the funds may be good, but in this matter, those with long experience i.e. old mutual funds prove to be good. The age of the mutual fund is ascertained from the registration done with SEBI.
- The investor should also find out the size of the fund while buying a mutual fund. From an external perspective, we believed that large mutual funds are good. But it is not considered a good idea to buy a stake even in a large mutual fund. Because of the large size, the control keeps slipping out of the hands of the fund managers.
- That’s why fund managers are not able to pay attention to small things. Due to this, the expected earnings of the investor from the mutual fund are put to rest. Large-sized mutual funds are therefore successful in maintaining their frills because they get saved from large size. Large-sized mutual funds do not make comparatively much profit. Therefore, this situation does not harm the mutual fund but the investors only.
Things about the fund manager while buying mutual funds
* It should be seen about the fund manager the tenure of the fund manager?
Generally, funds operated by such fund managers who have experience of up to 0 years, can be trusted.
* Assess the investment style of the fund manager i.e. whether his investment style is different from other fund managers.
* If the fund manager has seen both the ups and downs in the stock market during his tenure, and the experience of a manager is considered good at this point
» While buying a mutual fund, the investor should keep it well in his mind that “The fund manager is not personally responsible for the profit and loss on the investment of the investor. He tries his best to make the investor earn. But 100% profit not be guaranteed.
Other things to keep in mind while buying mutual funds
1- Necessary information collected regarding the fund family. Information regarding the fund family is available from the respective fund’s website. The fund family schemes are running profitably, that fund is considered better than others.
2. While buying a mutual fund, it is also necessary for the investor to see the turnover. The mutual fund whose turnover is very high i.e. from 100 percent to 200 percent. It means that the fund manager sells the entire fund several times a year. This situation may be good for the fund manager, but it is not good for the long-term investors. So it is better to stay away from such funds.
3. It becomes necessary for the investor to study the asset allocation strategy as well. But more flexible, the asset allocation policy of a fund, the lower the relative risk in that fund.
4. The exit rate of the fund should be seen as how many investors are going out annually while buying a mutual fund. What is the speed of redemption of the units of the fund? If many people are leaving the fund. So it means that there is an internal shortage of the fund.
5- Instead of buying units at market price, if the offer for new units is open, then preference should be given to buying units in the new offer. Because new units are available at face value while old units are present at market value
6- While buying mutual funds, keep in mind that if the mutual fund is old, then the NAV of the last several years should be seen. Is the NAV increasing continuously? It should also be seen whether or not it is happening. Because it facilitates decision-making. But if the NAV fluctuates a lot. So it means that the amount of risk is high.
7- What is the investment objective of a mutual fund? It is also important to know whether the object of the mutual fund matches the investment objective? If the purpose of both is the same then it will be good. Because whatever you want, that mutual fund will want. Therefore, the investment path of the investor will be easy.
8- While buying a mutual fund, an investor should not fall into the trap of hot funds because no fund or scheme remains hot all the time. Hence, the investor should focus on his portfolio instead of focusing on the fund or unit-specific. Because the objective makes a profit and the portfolio help earn profit.
9- The investor should calculate the expected return to be received from the mutual fund. And it should be seen that what benefit will he get in future? Will the rate receive a match with the increased inflation rate? Because the rate of earnings is less than the rate of inflation, then there will be no profit from the investment.
10- Keep in mind that while issuing mutual funds, companies issue prospectus. In this prospectus the companies declare everything. Therefore, the investor should take the investment decision after reading the prospectus carefully.
11- You should differentiate whether the investment is being made to trade securities or to keep safe for a long time. Because the decision affects the selection of securities or mutual funds,
12- The investor note that the risk factors are written in fine letters in the fund offer. Therefore, the importance of fine letters not be overlooked while buying mutual funds.
13- Please don’t go for advice while buy mutual funds. That is to say, to what extent is it justified to pay for the service that the investor can do himself.
14- Keep in mind that one should not be tempted towards Superstar Mutual Funds as there is already a crowd. And it is said that the crowd does not make a profit.
15- If the investor wants to earn well, then forget about short-term investment. The investor can follow these three policies. Buy and hold and watch and buy and forget. When buy mutual funds.
The chances of making profits are high if you follow the buy and forget policy. Because when the investment made by mutual funds is remembered, then the investment will have increased manifold.