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Important things to know about mutual funds before you invest in themBY: David Prakash Kumar | Category: Business and Finance | Post Date: 2009-10-09
Many people know of the importance of mutual fund investment and start investing systematically in them. Mutual funds are of many types and they cater to different groups of people. There may be people with very high risk appetite. These people can invest in many funds that are also in the high risk category. These funds also may give high returns. Many other people who invest in mutual funds use it as a means of saving rather than investing. For these people, a low risk but low return giving mutual fund will be very beneficial. These people do not need a mutual fund that is linked to equity. Almost all mutual funds are linked a little to the equity markets. The percentage of the fund linked to the equity market depends on the fund and the fund manager. There are a few very important facts that a person has to remember before they start investing in a mutual fund. 1. Fund manager: To invest in a mutual fund, the track record of the fund manager is very important. This is because the fund manager is given all the authority to invest the money of the investor. A fund manager who is able to assess the market and economy correctly and invest would have high returns. A fund manager who has not been able to time the market would have got very little returns for the investors in his fund. This is the reason that the fund manager is very important in the mutual fund and investment in the mutual fund. 2. Entry and exit load: The entry and exit load in a mutual fund is very important because each fund can charge a varied entry and exit load. This is the amount that is deducted as a percentage from the money invested by the investor as fees for the mutual fund investment. There are many funds that charge very little, but there are also others that charge a lot of money. The investor has to balance between the returns and also the entry and exit load before investing in the fund. 3. Type of fund: The type of fund that a person is investing is also very important as far as the return of investment in the mutual fund is concerned. When an individual invests in a mutual fund that is not diversified, then if there is a sudden loss or downturn in the particular sector, then the value of the fund will reduce drastically. This is the reason that people usually prefer to invest in a diversified fund rather than a mutual fund that invests the money in a single sector. Funds that invest in a single sector can give a lot of return only if the economy is booming. 4. Individual stocks: The mutual fund returns also depend on the pattern of investment by the mutual fund manager in various individual stocks. There are some funds that invest in a few stocks that may not give high returns. This is the reason for the investor to study the pattern of investment in various funds before investing in a particular mutual fund. Article Source: http://www.saching.com About Author / Additional Info: I am a physiotherapist and also a freelance writer. I have been writing for many blogs and websites and also take up freelance assignments. Comments are welcome at prakashdavid@rediffmail.com Additional Articles: * Materials and costs involved in starting an internet based business * Deceptive business practices: The *CONDITIONS APPLY tag * Waste Management System for Mumbai * Maritime safety and environmental risk by Oladokun * The many advantages of Conference Calling Does this article violate or infringe on your copyright ? It is a violation of our terms for authors to submit content which they did not write and claim it as their own. If this article infringes on your copyrights, then use our Contact us form with the detailed proof of infringement along with the offending article's title, URL and writer name. If you do not hear back from us then contact us again in another 10 days. Thank you. Comments on this article: (0 comments so far) * Additional comments are now closed for this article *
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