In today’s time, SIP in mutual funds is considered one of the best ways to invest in the stock market. But experts advise that if you want to get good returns in a mutual fund, then it is very important to analyze it from time to time whether your mutual fund is able to beat the index or not.
How to analyze mutual funds
Keep the objective clear: While investing in mutual funds, your objective should be clear as to why you are investing. If you are investing for a long term then invest in SIP continuously for a gap of one or two years, because SIP returns in mutual funds are visible only after one or two years.
Benchmark: You always need to check your mutual fund scheme to see if your mutual fund is performing well than its benchmark or not. If your mutual fund is consistently underperforming its benchmark, you should talk to your financial advisor and consider investing in another scheme.
Risk: Always keep an eye on the fluctuations in your mutual funds. If you have invested in high risk mutual funds. During market turmoil, greater fluctuations may be seen. This can have both positive and negative (depending on market conditions) impact on your portfolio. In such a situation, if you can take more risk then only invest in mutual funds with high volatility.
Charges: You should always have complete information about the charges deducted by the mutual fund company.
Changes in management: As a mutual fund investor, you should have complete knowledge about the management of your scheme. If there is any change in this, immediately see what effect it will have on your investment.
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