Business News Desk, Even today there are many people who do not invest directly in the market because the risk in the market is very high. As fast as your money grows in the stock market, there is also a risk of it decreasing at the same speed. Mutual funds are a better option for such people. There is less risk in mutual funds as compared to direct investment in the stock market. But this is a market linked scheme, so it cannot be called completely risk free. Therefore, if you are going to invest in mutual funds through SIP, then understand some things related to it well, so that there is no scope for regret later.
Why lower risk than stocks?
Even in a situation of market uncertainty, the risk in mutual funds is considered to be low. The main reason for this is that the money in mutual funds is invested based on the experience of the fund manager. This increases the possibility of better returns and the risk is reduced significantly compared to direct investment in shares. But this risk is not completely eliminated.
Selection of fund is very important
The biggest risk of mutual funds is the stock market itself. However, the risk depends on the type of fund your money is invested in. Investing in large-cap or blue-chip funds can reduce the risk, but if you are investing in small-cap funds with good returns, keep in mind that the possibility of loss increases in the market fall. There are many types of schemes in mutual funds. Expert advice is very important to decide which scheme will give you good returns because if the scheme in which you are going to invest is already giving very good returns, then the rapidly rising inflation will not affect it much and you will be in profit, but if the scheme in which you have invested has low returns, then its actual value decreases due to inflation. In such a situation, you are not in much profit. This is the reason why experts recommend investing in different schemes based on different risks and returns. So that your average return remains good.
Changes in interest rates are also a big risk
Changes in interest rates are also a big risk for debt mutual funds. To get better returns, you have to consider the increase or decrease in rates along with many other things while selecting the scheme. Experts believe that debt funds perform better when interest rates fall.
how to choose the best mutual fund
Make a list of the top contenders for the best mutual fund and compare them. Keeping in mind the goal for which you are investing in mutual funds, see which fund is meeting your needs. Compare their history, expense ratio, history of the fund manager, etc. This will help you a lot in choosing the best SIP as per your needs.
Consult a financial advisor
If you have no idea about investing in mutual funds, or you are unable to make a decision even after following all the instructions mentioned above, then talk to a financial expert. He will help you choose the best SIP according to your needs. If you choose the right SIP for yourself, you will get better returns and you will never regret it.