HOW TO TRACK GOOD STOCKS IN MUTUAL FUNDS FOR INVESTMENT?

A mutual fund can be defined as a type of investment cycle where invested funds are pooled together into an investment product. When investing in mutual funds it is very important to stay up to date, as in recent years Mutual Funds has gained a lot of popularity for being one of the most effective investment avenues. At Muthoot Finance, we can help you pick the best mutual funds to invest in 2021. 

In the world of investing, risk and profits come hand in hand. It is rightly said that in order to get higher returns, one must take greater risks. However, on the contrary, it is not always true, that investing in high growth stock mutual funds and taking a greater risk will not always result in higher returns. Taking risks is not a bad thing, but it is essential to take high risks, but it is very essential to have tactics that can help mitigate investment risks.

Since mutual funds include varying degrees of risk, you must consider your financial situation, age, and predicted income growth in the near future to determine your risk tolerance. Customize your investment portfolio based on your risk tolerance. For example, investors with a moderate to high-risk tolerance might invest mostly in stocks to attain their long-term objectives. On the other hand, low-risk appetite investors prefer a balanced portfolio that includes a mix of debt and equity, especially for long-term financial goals.

How Do Mutual Funds Work?

A mutual fund is established when an asset management firm collects assets from multiple individuals and institutional investors with similar investment goals. In terms of how it works, a fund manager professionally manages and purchases securities, such as stocks, and the pooled investment by strategically investing in assets to maximise returns for investors in accordance with the fund's investment goals. According to the amount invested with the firm, the units of funds will be allotted to the investors. The profits and losses will be directly proportional to the amount invested. The major goal of the fund manager is to provide high returns to the investors by investing in the securities that they receive.

Tracking Mutual Funds That Suits your Portfolio Requirements

One of the major benefits when you buy mutual funds is that you have a fund manager with substantial knowledge and experience in the sector. You don't have to be concerned with selecting stocks, monitoring them, or making allocations. Although, this service is not accessible for stock investments. You are in charge of selecting and tracking your investment.

Define your portfolio goals with your risk tolerance

Investors’ risk tolerance varies from investor to investor. For instance, stock mutual funds are ideal for investors with a high risk appetite. When selecting mutual funds for investment, one must evaluate their age, financial situation, number of dependents, objective duration, and risk tolerance. Choosing the right stocks for investment that suits your goal will bring higher returns.

Identification of the right funds for investment

Before investing it is important to identify the right funds for investment and their objectives. Will the funds be utilised to pay for education or to save for a long-term retirement? You should also think about your own risk tolerance. Can you tolerate large fluctuations in portfolio value? Is a more cautious investment better suited? Because risk and return are proportionate, you must weigh your desire for rewards against your willingness to accept risk. There are different types of mutual funds which are as follows:

• Money Market Funds

• Fixed Income Funds

• Balanced Funds

• Index Funds

• Equity Funds

• Funds-of-Funds

• Speciality Funds

Study the market

To fight inflation and enhance their wealth over time, all investors want a greater RoI by investing in financial products such as mutual funds. Mutual funds have a better chance of producing significant returns over time since they may invest in a wide range of sectors and businesses. Before investing in funds, it is essential to conduct market research. Checking the trends, mutual fund share price today, what it is about, and your predictions for the future are all important factors to consider before investing.

Track the Mutual Fund You Are Investing In

Many investors believe that net asset value is comparable to stock price. As a result, they assume that a fund with a smaller net asset value is less expensive and hence a better investment. In reality, it is not a reliable predictor of mutual fund performance. A lower value alone does not make a fund a better investment, nor does it make a fund a better investment. As a result, it should not be the sole deciding factor when selecting a mutual fund.

When investing in a mutual fund scheme, you may find the NAV of the mutual fund to be of little importance. To achieve your investment targets, you must base your investing selections on your investment objectives, risk tolerance, and time horizon.

When investing in stocks and equity funds, you must have a long-term investment perspective and analyse current performance. You must, however, be able to time your withdrawal from stocks. To reach your long-term financial goals, you might use the purchase and hold approach with equity funds.

With Muthoot Finance, you may select from a variety of mutual fund investment plans which are an excellent option for those looking to gain exposure to skilled portfolio management. Visit your nearest Muthoot Finance branch to know more.