Wednesday, April 14, 2010

Step should be consider before the investment in the Mutual Funds company

Mutual funds investment now days get the important means of investment as it gives higher return with low risk in comparison to other mens of investment.
Some criteria are decided to go for the mutual funds investment :

Suitability: Before investing in mutual funds you need to decide that this is the right means of investment and also suitable with your requirement and fulfill the condition which you want .
Level of risk:

Level of risk: Mutual funds pay the good return but it doesn't means it risk free investment , risk level not ignore .Than it require that you decide how much risk you can afford, because there is interest risk capital risk due to reduce in price value of the bonds the market go down ,than also the investor lost there money which invested in the mutual funds, therefore the investors need to first select how much risk level he can afford.

Investment objective: When any investors invest in the mutual funds he first decide the objective of investment. Objective means he prefer the growth means want to get the capital profit on redemption or prefer the increase in the income by dividend on the investment.

Funds performance:Funds performance check by the past record of the funds,but its also true that past trends cannot decide the future performance. Past trends only help to check the performance ad some situation,it also helpful.

Funds portfolio:Before investing in any mutual funds scheme ,investor need to check the portfolio combination. Where the funds invest its funds.
Funds objective: Funds objective means Funds invest total investment in particular sector or in specific industry and there is any deviation the investment trend in the near future or not.
Diversification of investment base: It also needed to check that fund change it investment policy regularly which is not good in point of view of investment return .Regular diversification show that the investment is not earn long term gain in the market.
Transparency : Check that Mutual funds company regularly produce his financial report in media also send the news letter to the investor also the detail of the investment and income report available at all of its branch office.
Discloser:Mutual funds disclose all its material facts and policy to the governing bodies appointed by the govt. to look after the performance of the mutual funds there is no hidden agenda or investment.
The main goal of invest is getting good return get when we sell the investment therefore there is need to check that mutual funds sell there investment at regular interval and maintain th profitable business by selling except in some cases when market goes down. When we decide to sell the funds:
Regular under perform by the Funds: When the fund company market value regularly reduce than it better to sell the funds to minimize the capital loss or to save from further loss.
Drift in investment style: suppose the mutual funds company change his investment pattern and invest in different avenue than the path of investment mention in the rules and regulation book of that Mutual funds than its better to sell the portion of investment.

Consolidate : Means to get return or collect the funds from the sale of the investment.

To earn the tax break:If anyone want to get the tax benefits investment than go for the tax saving plan or to invest in the equity where the investor get the tax benefits on the investment.

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