Myths and facts about the best mutual fund!

In today’s times, increasing work pressure and lack of time to follow what’s happening in the financial world often proves to be an impediment for choosing the correct mutual fund. We do not know where to start from, and are clueless regarding which mutual fund investment will prove to be the best mutual fund for us! Let’s have a look at where to start from, and how exactly to choose the top mutual fund.

Where should one start from? 

• Take referrals 

We are surrounded by relatives, friends, and colleagues who talk about the financial market day in and day out. While some of them prefer to keep their investments secretive and therefore don’t divulge much, there are many who will tell you about mutual funds in detail. Take references from them regarding which companies are suitable and which funds are working well.

• Use the internet 

Internet is possibly the best place you can resort to for finding out information. Internet is full of investors’ forums where people talk about good investment options and their experiences with certain mutual funds. You can ask your queries and get your doubts solved. People are ready to help out.

What should you look for in a mutual fund? 

• Your goal 

Every investor has a goal in mind. While some want to make income out of mutual funds, others want to invest for a long term without caring for immediate returns. Never invest in a plan that doesn’t suit your sensibilities. You will always have complaints with the mutual fund otherwise. Invest in a short term, medium term, or a long term investment depending on your personal goal.

• The risk/return adjustment 

You might have heard the famous line ‘Mutual fund investments are subject to market risk. Please read all scheme related documents carefully before investing’. This dialog, that we often tried to ape as teenagers, has a deeper meaning. The market is volatile, dynamic, and cannot be trusted. If you want to invest in a low risk fund, the returns will be limited. And so is the case the other way round! So calculate your risk/return adjustment and invest in a plan that’s suitable for you.

• Everything else 

There are various other factors that can determine which mutual fund is ideal for you. You need to know how qualified and experienced your fund manager is. Secondly, you need to know what fee is charged by the mutual fund. Thirdly, you should be aware about the investments being made by the fund manager on your behalf.

And remember, if you are planning for a long term mutual fund investment by keeping in mind your retirement, then keep a retirement savings calculator handy to see how much income you can expect.