Mutual Funds It has become very popular among small investors. Today, even small investors are making big money through SIP. However, now that the market has reached a record high, making money will not be easy. In such a situation, if you want to get strong returns on your investment, then you will have to keep doing some work from time to time. If you do this, then you will not only be able to get more returns than other investors but your money will also be safe. Let us know what to do to get strong returns on mutual funds?
Choice of Fund
Be very careful while choosing a fund. Choose a fund only after understanding your financial goals and risk taking capacity. There are different types of mutual fund schemes available, including equity funds, debt funds, hybrid funds and thematic funds. Each category serves different objectives and presents different risk levels. Choose the fund that suits your needs. If you are not able to understand it yourself, seek the help of a financial expert.
Equity funds give bumper returns in the long term, but they carry higher risks.
Debt funds are low-risk options that focus on income generation and capital preservation.
Hybrid funds combine elements of both equity and debt, providing a balance between risk and returns.
Fund Performance
Look at the historical performance of the mutual fund. Ideally over multiple time periods, such as 1 year, 3 years or 5 years. Look for consistent returns and compare the fund’s performance to its benchmark index and peer group. Remember that past performance is not indicative of future results.
Fund Managers and Fund Houses
Before investing in any mutual fund scheme, find out who is the fund house i.e. company and fund manager of that fund. Review the historical performance of both the fund house and the fund manager. Both of these play an important role in selecting a good mutual fund scheme.
Expense Ratio
Expense ratio is the annual management fee of the fund. This has to be paid to the fund manager. Generally, lower expense ratios are more beneficial for investors, leading to better returns. Therefore, before investing in any fund, definitely check the expense ratio. By doing this, you will be able to get big savings and better returns.
exit load
Before investing in any mutual fund, find out how much exit load you will have to pay if you withdraw money from it before time. After this, also assess the liquidity of the fund. If you take care of these things, then believe me, you will be able to get more returns on your investment than others.
