Increase your money manifold How?

Do you want to increase your money manifold? Do you want your existing money to create wealth for you and make you rich?

What is a mutual fund?

A mutual fund is an open-ended professionally managed investment fund, which withdraws money from many investors to buy securities. These investors may be retail or institutional in nature.

In simple terms, we can say that a mutual fund is a type of investment that uses funds from investors to invest in stocks, bonds or other types of investments. A fund manager or portfolio manager decides how to invest the money, and is charged a fee, which comes from the money in the fund.

There are three main types of mutual funds: equity funds, fixed-income funds and money market funds. Each of these types has a different risk level associated with it.

If you are thinking of investing in an equity mutual fund, you may find it difficult to decide which to choose from the vast array of funds on offer. It is difficult to figure out who will do well in the future and give you returns by beating industry peers.

However, if you follow certain fundamentals while choosing a fund, chances are that you can get a good return on your investment.

How to choose the best fund?

Some important aspects of choosing a good mutual fund scheme are:

The process of effectively selecting an equity fund to match your need begins with your own risk tolerance and a strong assessment of your financial goals.

It is an top-down process rather than a 'bottom-up'. For example, you may be a medium-risk investor to start a SIP, but your goal may be 15 years away. In such a case, you should explore options within the diversified equity category. Similarly, a risk-loving investor may want to consider more volatile funds, such as mid-cap funds, which have the potential to deliver a higher CAGR, ”said Mayank Bhatnagar, chief operating officer, FinEdge.

Choosing an equity fund purely based on the 'rating star rating' provided by portals or issuers is not a fool-proof fund method.

When you buy a mutual fund, you are depositing your money with other investors. You invested money in a mutual fund by buying units or shares of the fund. As more people invest, the fund issues new units or shares. Investment in mutual funds is managed by a portfolio manager

Where do investors go wrong?

Bhatnagar said that many individual investors choose equity mutual fund schemes for the wrong reasons. For example, we have seen many customers participating in equity schemes based on returns of only one year. This is often more than backfiring; Because short-term performance is usually the result of one or two alpha-generating stock picks, and this is typically not an excess for the long-term future. Similarly, selecting an equity fund purely on the basis of 'star rating' provided by portals or issuers is not a fool-proof fund selection method. Another trap retail investors should look for is the media hype created by smartly designed advertising campaigns, ”he said.

Check before you park your money?

Having zeroed in on your most appropriate fund category, you now need to select a fund within that location. As a rule of thumb, go for a fund that has a strong vintage, and has a track record of navigating at least three full market cycles.

Bhatnagar further stated that an investor should assess how the fund management team responded during the 2008 global financial crisis, at the stage of market management.

Check if Nidhi is 'right for the label' or capitally chases Bates. Evaluate its category of 3-year, 5-year and 10-year returns vis-a-vis. Finally, take a moment to assess the fund manager at the helm. Chances are, he or she will need to navigate to more than one bear market from maturity during their investment tenure!

"Avoid funds that are managed by Greenhorn 'Whiz Kids', regardless of the impact of their academic credibility," he said.

Santhosh Joseph, Founder and Managing Partner Germanet Wealth Solutions LLP, says there are three simple filters that can help you make a good decision.

Company background: Investors should check the credibility of promoters of a mutual fund company. Established and professional companies have sound policies and investment experience to ensure that your money is safe and also to benefit from market activities.

Portfolio / Fund Manager: The fund manager's track record and his ability to navigate market cycles successfully over a long period of time is a great factor to study.

Fund Objectives: Objectives of the investment: Check the capacity of the fund sticking to the mandate. Avoid a fund that has frequent changes in the overall theme or allocation.

There are many who fall for the obvious past performance formula. There is always a more intelligent option, to contact it.

Thank

Manoj