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2.''It is difficult to identify the right kind of investment scheme and to decide on entry and exit to earn better and higher returns .'' In this context, explain the key steps an investor should take while investing in a Mutual Fund.
For investing in a Mutual Fund , every investors has to follow the below given steps:
- Determine the investment goal (retirement , asset purchase, to meet expenditure on education/wedding , etc.)
- Based on the investment period risk appetite , tax liability and inflation rate , decide the correct mix of debt/ equity that one should have in one's portfolio
- Having decided the correct mix of debt /equity the investors has to then list the MF schemes that best match his requirements
- Select the scheme(s) from this list based on the reputation of sponsor , Fund Manager , portfolio quality, past performance , etc.
- Review the scheme's performance and returns on investment from time to time
- Seek professional help in case the above cannot be carried out independently.