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Right Way To Choose Mutual Funds

Posted on 12-Jul-2023

6 min read

Are you ready to choose the best mutual fund investment schemes? If the answer is yes, here is the blog to read,Choosing the best mutual fund investment scheme is significant if you are planning for a long-term and secure investment.The invested money can be withdrawn to meet financial emergencies.

Table of Content

How to choose best mutual fund investment schemes?

Are you ready to choose the best mutual fund investment schemes? If the answer is yes, here is the blog to read.

Choosing the best mutual fund investment scheme is significant if you are planning for a long-term and secure investment.A mutual fund is the saving scheme in which the fund collected from a group of people will be invested in various financial platforms.The invested money can be withdrawn to meet financial emergencies. Due to the long-term and huge returns, mutual fund investments are chosen by a huge population in India. If you are a beginner, here we explain how to choose reliable mutual fund investment schemes. Selecting the mutual fund scheme is easy if you follow the step-by-step commands below.

Guidelines to choose best mutual funds to invest right now Identify your financial goal

As the first step of choosing the mutual fund investment scheme, you need to identify and define your financial goal.The financial goals can be short-term, long term and mid-term.After setting the financial goal, you can proceed with the remaining steps of the mutual fund investment process.It's equally important to understand the investment objective. Investing in mutual funds helps to reach your financial goals quickly without any hassles.

Consider the risk factors before investing in mutual funds

As soon as you proceed with the mutual fund investment, you may come across certain risk factors such as non-guaranteed risks, market risks, liquidity risks, inflation risks, and much more.To reduce or lower the risk factors associated with mutual fund investments, it's good to choose SIP or the systematic investment plan.The systematic investment plan or sip mutual fund permits investing money at periodic intervals.Hence It's equally important to monitor the performance of mutual funds regularly. As the risks and returns associated with mutual fund investments are directly proportional, it's essential to be aware of the risk factors that arise and be prepared to handle it proficiently. Among the different categories of mutual funds, equity mutual fund investment schemes are often prone to market risk or fluctuations.

Decide the category of mutual fund

Mutual fund investment schemes are categorized into different types such as active and passive mutual funds. It’s your interest to pick the best among the category of mutual funds. Active mutual funds are actively managed by mutual fund managers whereas the fund managers are not involved in managing the passive mutual fund investments.Remember that the mutual fund investment schemes that you choose suit your long-term financial goals.

Size of mutual fund investment schemes

When it comes to mutual fund investments, considering the size of the mutual fund is essential.The performance of mutual funds doesn't need to rely on size. Investors can go for investment schemes that possess excellent performance records.

Performance of mutual funds

Before choosing a mutual fund investment scheme, investors can consider past performance and the value of returns on mutual funds. It's good to choose mutual fund investment schemes that offer fixed or huge returns.There are mutual fund investment schemes that outperform the benchmark.The performance benchmark of mutual funds is the standard set to calculate the performance of selected mutual fund investment schemes.To find these investment schemes, the investors can check the performance record maintained by the mutual fund managers.The net asset value or NAV can also determine the performance of mutual fund Investment schemes.By choosing the top-performing mutual funds, investors can reach their financial goals without any hassles.The performance depends on the type of mutual fund schemes selected. Note that the past performance of mutual funds cannot predict the future performance of mutual fund investments.

Period of mutual fund investment

Mutual fund investment schemes work during different time intervals.The period of investments may start from one day and can even extend up to 5 years.The time horizon or the period in which a person is willing to invest the money must be considered.

Expense ratio

Considering the expenditure or expense ratio is important when it comes to mutual fund investments. Investors can choose schemes with a low expense ratio to get huge returns on investments.The term expense ratio denotes the fee or income charged for the proper management of mutual fund Investments. By subtracting the expense ratio from mutual fund returns, the net returns on mutual fund investments can be calculated. If the expense ratio is high, the returns on mutual fund Investment will be low.

Entry or exit load

As a mutual fund investor, it's essential to check if the mutual fund investment selected possesses zero entry or exit load.The term exit load denotes the total amount or the fees charged during the entry and exit of mutual fund investment schemes. Entry or exit load depends on the type and category of mutual fund investment schemes

AUM- Asset under management

The term AUM, the asset under management denotes the total amount of funds managed by the mutual fund Investment schemes. In other words, the term AUM is the total market value of the investments. If the value of AUM is high, it will be challenging to enter and exit the mutual fund investment schemes.

Tax on mutual fund investments

Mutual fund investments are tax friendly.Tax on mutual fund investment is an important factor to consider before choosing mutual fund investment schemes.The Investors can choose the category that is less taxable.For example, the tax on short-term capital gain in an equity fund is comparatively low when compared with long-term capital gains.


The benefits of investing in mutual fund schemes are many. To begin your mutual fund investment, we suggest the reputed firm, Shriram mutual funds. With years of experience and expertise, the firm holds an excellent record of offering outstanding financial service to the investors. After considering the key points mentioned above, you can decide the best scheme to choose. To begin investing in mutual funds, access the mutual fund account, complete the required KYC information, identify the reliable mutual fund schemes and finally transfer the required amount of money to begin the investment right away. Investors can get help from mutual fund managers to complete the investment process effectively.You can get huge returns on mutual fund Investments

Meta-To choose mutual fund schemes,we suggest considering the factors such as size, performance, expense ratio, entry or exit load, and the amount of returns

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