Before you pick a mutual fund, there are a few things you need to consider. Some of the major ones are:
- Have a goal
When one invests in stocks, there is a lot of research required before and one also needs to put in a lot of time and efforts. With mutual funds, there is minimal paper work and is thus convenient in a lot of ways. With online platforms these days, you can buy a mutual fund as easy as it is to purchase flight tickets! You can simply visit your broker's website online and place your order. Furthermore, you can also easily transfer your funds from one mutual fund to another.
- Fund performance
Many investors tend to look at the past performance of the mutual fund and then decide to invest in the particular mutual fund. But remember that the past performance of the fund cannot guarantee how it is going to perform in the future.
You might want to look at the fund's performance over a long time and also see ratings. Then you can decide to invest in the fund.
- Costs associated
You may want to invest in a fund by seeing all the relevant expenses such as transaction fees. In some cases, there are high initial investment fees whereas in some there are higher ongoing fees.
These are just a few. You may want to see what risk measures has the fund taken and carries out. Further, look for low costs and consider your financial status.
- Know your fund manager:
Know the tenure of your fund manager. Also, find out how he allocates your funds and invest accordingly.