Important factors to consider while selecting mutual fund.

-

     In 21st century everyone wants to build and create wealth, and they start from teenage i.e. 20 or 22 that's best to invest early to enjoy the magic of compounding which starts to show its power after 15 to 20 years of investing. Best road to invest in stock market is of course mutual funds. where individual don't need to cater stocks every day and not to watch market run on daily basis. But catch is How to select the best mutual fund, which things one to consider while choosing best mutual funds. without wasting further time let's discuss one by one: -


1. Risk appetite

First of all, you need to consider your risk tolerance level i.e. How much risk you can bear on investment. suppose your risk tolerance is high then consider equity funds, if moderate then consider hybrid funds which combined equity and debt in portfolio and if your risk level is low then consider debt funds. If want to know more about various types of funds to get aware about risk tolerance, then visit 


2. Objective

What's your objective while investing your amount-

a) Growth- If your objective is aligned to growth then equity fund or flexi cap fund is good option as they invest primarily in equity stocks.

b) Income- If you want passive income source then debt fund is good option as they invest primarily in debt funds. Debt Funds offer a predictable income stream as interest or dividends.

c) Balanced- If you are not sure about your objective strategy then best option to choose is hybrid funds reason behind is they invest balanced amount in equity as well as stocks. which provide you the moderate risk tolerance.


3. Time Horizon

a). Short-term goals (1–3 years): Consider debt or liquid funds for stability.

b). Long-term goals (5+ years): opt for equity funds to benefit from market growth over time.


4. Fund Performance

Review historical returns but don’t rely solely on past performance.

Check performance during various market conditions (bull and bear markets).

Compare fund returns to relevant benchmarks (e.g., S&P 500, Nifty 50).


5. Expense Ratio

Lower expense ratios mean higher take-home returns for investors.

  Actively managed funds often have higher expense ratios than passive funds (like index funds).


6. Exit Load

Exit Load is a fee charged by mutual fund companies when you redeem (sell) your mutual fund units within a specific period. It is meant to discourage short-term trading and protect long-term investors.

Be aware of penalties for withdrawing investments early.

Ideal exit load for long term is 0% (After 1 year)

Ideal exit load for short term is 0.25% to 0.5% (Redeem within in year)


7. Tax Implications

Equity funds typically have favorable tax treatment for long-term gains.

Debt funds have different tax rates based on holding period.


8. Fund Manager's Track Record

Evaluate the expertise and consistency of the fund manager. A well-regarded manager can significantly influence fund performance.


9. Liquidity

Open-ended funds offer easy redemption.

Closed-ended funds have limited liquidity and may lock your money for a set period.


10. Investment Platform

Check for ease of access, user experience, and transaction fees on platforms you plan to use.


11. SIP or Lump Sum

Systematic Investment Plans (SIPs) help average out investment costs over time.

Lump-sum investments can be more effective during market dips.


12. Diversification

Avoid over-concentration in a single fund or sector. Diversify across asset classes, sectors, and geographies.


13. Ratings and Reviews

Refer to ratings from independent agencies (e.g., Morningstar, CRISIL).

   


Popular posts from this blog

Significant Types Of Mutual Funds in India...

-
          There are various types of mutual fund schemes in India related which helps individual to invest in stock market according to their risk tolerance and risk appetite. Individual can consider schemes by choosing significant amount to invest in per month. This kind of investing known as SIP (Systematic Investing Plan). There is new arrival of schemes mutual fund market. keep this blog relative to the topic and let's get started. 1. Hybrid mutual fund: -          This fund combines the benefits of Debt and Equity funds. This kind of funds allocate it's all corpus in debt and equity assets. To balance the risk tolerance. 2. Flexi cap fund: -           Flexi cap fund invest Primarily in equities like large cap fund, mid cap fund and small cap fund having no restriction on percentage of investment. 3. Quantitative fund: -          Quant funds  use mathematical models, ...
Read more

Trust worthy Indicators of Stock Market

-
1. Morningstar Rating : Morningstar provides ratings that indicate a stock’s risk level and suitability for different types of investors. 2. Analyst Ratings : Professional analysts typically offer ratings on stocks they cover that indicate a buy, hold, or sell recommendation. 3. Earnings Reports : Public companies must file reports on their financial performance that can be used to assess the sustainability of their profits. 4. Abnormal Trading Activity : Long- or short-term unusual trading activity can be an indicator of insider knowledge. 5. Analyst Conferences and Press Releases : Publicly traded companies convene analyst conferences to discuss their financial performance and often issue press releases to update investors. 6. Management’s Track Record : Experienced managers with a successful track record are generally more trustworthy than those who are new to their positions.
Read more

Blockchain...

-
 Blockchain!! Blockchain!! We often here about Bitcoin in our daily life. but do we know enough about its foundation, that on which technology it's based on. that's why Todays, topic is about blockchain. The unsung hero behind every secure and legitimate transaction of Bitcoin and like every cryptocurrency. Before diving into the core part of the Blog, let's see why we are in need of blockchain. so, take an example of our current financial system. suppose A paid $1000 to B then how this transaction reflects in baking software. A's account gets debited with $1000 whereas B's Account get credited with $1000, isn't it?? but here the issue is all the control of our transaction is in the hands of banks. They may put different amount instead of $1000. but they didn't because they are under scrutiny of central bank and central bank is under observation of finance ministry. it only means our whole financial system running on trust. hence our system is Centralized....
Read more