Mutual funds are a favoured choice among investors today due to their appealing returns and diverse investment options. To new investors, a fund with the greatest returns over a short period of time may seem like the best option.
However, this is not always the case. Investing with only returns in mind could result in being counterproductive and lead to losses in the long run. So how do you choose a good mutual fund? This blog will give you an idea of how you can make the right decision and invest in high-quality mutual funds.
What Is A Good Mutual Fund?
A mutual fund consists of a large pool of money pooled gathered from a number of investors. This pool of money is managed by an expert known as a fund manager. Choosing to invest in an MF reduces portfolio risk through the use of diversification, are usually priced fairly, and allows for professional portfolio management.
A good mutual fund would ideally consist of:
Low expense ratio
Solid historical returns
The entry and exit load
The fund manager
These factors are just an example of the parameters that can determine how good a mutual fund is. But apart from these, there are other factors that you must consider before investing in a mutual fund. Speak to a wealth coach to know more.
What Factors Should You Consider Before Investing?
It is important to invest based on research and data. But here are some factors that can help you invest better:
Prior to investing, it is important to know what your financial goals are. One should set a target date, a time frame and a certain amount of return expectations. Without a goal, it is easy to forget about your investment or exit without a reason. Consulting a wealth coach will help you with this.
Any investment that would get you meaningful returns is almost always going to be risky. The higher risk is taken, the higher the potential reward. However, this is an oversimplified outlook as it suggests that a risky action will always have greater returns, which is not always the case as not every fund is run the same.
It is important to ensure that when choosing any fund, your returns should potentially be able to justify your action. Download the Cube Wealth app to take an easy risk quiz. It can help you identify your risk profile and suitable investment options.
3. Fund Management
It is important to research more about the fund manager and how long they have been at their helm. A good fund manager should be able to turn a poorly performing fund as they play an integral role in how a fund will perform. They decide on which stocks invest in and how to distribute the money for a particular mutual fund.
An investor should only compare two funds of the same type. A good mutual fund is one which is able to generate solid returns for its investors consistently over a time frame and not just random returns. The fund should be able to provide consistent returns during both the highs and the lows of the stock market.
Instead of timing the market and chasing trends, you’d be better off investing with the help of a trusted wealth advisor. Cube’s partner, Wealth First, has a history of beating the market by ~50%. They recommend the best funds for Cube users based on the analysis of 12+ complex parameters.
Watch this video to know more about Wealth First
Read more to know how you can invest in mutual funds that work for you.
Why Should You Invest Using Cube?
For years, effective wealth advisory was only available to high net worth clients and was incredibly expensive. But Cube has changed the way investments work in India by allowing Cube users to invest in options with advice from trusted wealth advisors.
Not just that, Cube has simplified wealth creation for busy professionals by giving them convenient access to the curated investment options from our mutual fund advisory partner, Wealth First. All of this through a simple and intuitive app that doesn’t confuse you with jargon or complicated graphs. The Cube Wealth app gives you access to options like:
But our advisors go beyond just recommending funds - they tell you when to sell as well. So if you’re a busy professional, getting a good wealth advisor can help you avoid keeping up with market trends and tracking the numbers.
Should You Invest In The Best Mutual Funds?
Mutual fund investments backed by diligent research and planning can help you create wealth for the future. But what is best now may not be the best in the future and investing in a mutual fund scheme depends on your investment goals, risk appetite, age, and other facts.
on stock picking, poring over excel sheets, financial news, analyzing market trends, tracking the Sensex, researching company fundamentals, comparing mutual funds, reading financial reports, trying to predict the future & losing your sanity!