It is necessary to choose the right mutual fund before investing. Not an easy task for many investors. Many categories of mutual funds, fund houses, and schemes are available. The best way to start this is for you to work on the right fund under thinking and planning. While researching the best mutual funds to invest in, most new investors look at past performance. To select this, there are five areas for which you will have to decide whether a particular fund is a good investment.
Performance
Performance comparison should only be used for the same type of fund. Otherwise, it makes no sense. Before selecting any fund, two important factors must be examined such as whether the purpose of the fund matches your investment goals and what are the various risks associated with the fund.
The risk
Almost all investments are risky, at least those investments that give you any meaningful returns. The true measure of risk is whether a fund is able to give you the kind of return that justifies the risk it is taking. However, measuring returns is not so easy. Several statistical techniques can be used to measure this.
Portfolio
Portfolios can be a bit difficult for those who have no idea of investment. Nevertheless, the analysis of portfolio and holdings gives you a general idea about the securities in which the fund is investing. You can find out in which company the mutual fund is investing.
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