How to Choose Your First Mutual Fund

1. How to choose your first Mutual Fund?

2. Introduction A mutual fund is an investment tool that collects funds from multiple investors and invests in assets like stocks, bonds, and other market instruments. Through mutual funds, an investor can diversify their investments by spreading it in multiple instruments. Professionals handle mutual funds, and they decide on how to allocate the funds to get higher profits for their stakeholders. Mutual funds are extremely popular among investors, and due to its popularity, many financial companies have launched different types of mutual fund schemes. But for a first-time investor selecting the best mutual fund from the wide variety can become a little difficult.

3. How to choose your first mutual fund? Fix your goals and check your risk tolerance - Before investing in any funds, an investor must identify and fix their goals for investments. Investors must decide whether their objective is for long term benefits or short term gains. Identification of goals is important for narrowing down and selecting the best mutual fund scheme. Type of funds -Investors who have decided to take a risk to get higher returns, in the long run, can choose long term capital appreciation funds. These funds have a high holding in equities which are volatile but has a greater potential of giving higher returns in the longer term. But if an investor is risk-averse and is satisfied with a regular income from mutual funds investment, then he/she must choose a mutual fund scheme that invests in governments bonds only which gives fixed returns. Fees -Mutual fund companies earn money by charging fees from investors. Hence it is required for the investors to be aware of different types of fees associated with a mutual funds investment before buying it.

4. How to choose your first mutual fund? Active and passively managed funds - Investors must decide whether they want to invest in active or passively managed mutual funds. Actively managed funds are managed by portfolio managers who decide with regards to which securities or asset should be bought using the fund. While passively managed funds keeps a track on the index and performs according to the benchmark index, which can be Sensex or Nifty. Passively managed funds do not trade their assets very often unless the composition of the benchmark index changes. Check the history of fund managers and funds -As with all investments, due attention must be given by investors on the past performances of the mutual fund schemes and their fund managers. Once the investors check the history of funds, they get an idea of funds capability of giving returns, and they can also make better investment decisions.

5. conclusion The above-listed points will help investors in selecting the best mutual fund, and it is not an overwhelming task. Just a little bit of research and fixing of goals will increase the chances of success.

6. THANK YOU