On what factors should we select the mutual fund? | How the mutual fund should be selected?

July 18th, 2010| Finance.

On what factors should we select the mutual fund? | How the mutual fund should be selected?

It would be difficult for us to select the mutual fund plan as there are more than 40 asset management companies, hundreds of policies, agents etc. it is only difficult but not impossible. We should about ourselves and we should know how much amount can be kept constant without using. We should also know whether we are saving for the education of the children or for the use after three years or any other purpose. Suppose that your goal is to be financially independent after the retirement. We can understand that we should not use the money for few decades. As the duration is limited, the people who have the fear of losses can also select the equity funds. Based on the age, our usage, and responsibility and capability changes. So we consider age as the main factor in mutual funds.

  • If we are young, we don’t have many responsibilities and we can face the challenges. So equity funds will suit us. We should not keep the money at a time, we should keep them when the market values decreases.
  • At middle age, the responsibilities will start and we know what the responsibilities we should perform in the future are. Even though we are having the fear of loss, we should select the constant funds. Balanced funds will solve their problems.
  • We should spend every penny in the mutual funds and we should invest some on the gold and permanent properties. Uniqueness is very important for the investments. We should also not save the whole amount in the single fund.

Observation:

We should see the positive and negative things in the fund in which we are going to invest. We can get good returns from the mid and small cap funds. When the market is good we can get good returns from the large cap funds. So we should select the fund which gives the returns in any market.

  • The company which is maintaining the fund is also important. We should know the details of the promoters and international deals as the investment may decrease due to international recession.
  • We should at least check the history of five years as the last year history won’t give the correct information. The funds may decrease in one year and the same may increase in another year.

We should not think of the increase and decrease of the market while selecting the funds. We should not forget that the fund values decrease and increase in the long term. Our financial uses and future goals should be important for us.