A mutual fund is an investment policy from a bank that gathers funds from various investors and puts in the money on behalf of these investors. Only a nominal processing fee is charged by the concerned bank to carry out the investment services. This is a very efficient way of investing money by first timers who do not know the much about investing. This is a group effort where everyone participates by putting their money into purchasing of bonds, stocks or any other kind of securities.
Your share of the investment fund is symbolised by a ‘unit’. The units can be bought or redeemed at net asset value or NAV for short. The Net Asset Value is not constant, and the fluctuations are dependent on the fund’s holdings. So when there is either a loss or a gain, it affects all the investors equally and proportionately.
The Mistakes To Avoid:
• While investing in mutual funds India, there are certain mistakes that you should try and avoid, especially if you are a first-time investor. When you are investing, you should be aware of the risk profile by understanding the mutual fund scheme employed by the fund manager. Before investing it is advised that you should be aware of your financial situation and profile and then make the investment according to your profile and capabilities. Trying to get too influenced by other people’s investment stories whether successful or unsuccessful might not be s very good idea for you.
• A common mistake that investors end up making is timing the market situation. It is always better to aim for long-term investments of 5-7 years rather than short-term ones.
• Do not forget to review your investment portfolio from time to time. Not doing so can affect your profit or loss. Reviewing your portfolio will be a learning lesson for you and help you to better prepare for your next investment.
• A mutual fund scheme has several categories; read your prospectus thoroughly and try to get information about all these share classes. After you have done so, try to make the most of your mutual fund share classes. People end up making the mistake of not reading the prospectus due to time constraints, trusting blindly the words of the fund manager.
• Another mistake that investors make on their journey to mutual fund investment is ignoring the sales load. A ‘sales load’ also known as a ‘sales charge’ is of various kinds; front loads, deferred loads, back loads, etc. A sales load is basically the fee or commission that is paid to the fund manager who is handling your investment on your behalf. Read up on this aspect carefully before investing.
Your share of the investment fund is symbolised by a ‘unit’. The units can be bought or redeemed at net asset value or NAV for short. The Net Asset Value is not constant, and the fluctuations are dependent on the fund’s holdings. So when there is either a loss or a gain, it affects all the investors equally and proportionately.
The Mistakes To Avoid:
• While investing in mutual funds India, there are certain mistakes that you should try and avoid, especially if you are a first-time investor. When you are investing, you should be aware of the risk profile by understanding the mutual fund scheme employed by the fund manager. Before investing it is advised that you should be aware of your financial situation and profile and then make the investment according to your profile and capabilities. Trying to get too influenced by other people’s investment stories whether successful or unsuccessful might not be s very good idea for you.
• A common mistake that investors end up making is timing the market situation. It is always better to aim for long-term investments of 5-7 years rather than short-term ones.
• Do not forget to review your investment portfolio from time to time. Not doing so can affect your profit or loss. Reviewing your portfolio will be a learning lesson for you and help you to better prepare for your next investment.
• A mutual fund scheme has several categories; read your prospectus thoroughly and try to get information about all these share classes. After you have done so, try to make the most of your mutual fund share classes. People end up making the mistake of not reading the prospectus due to time constraints, trusting blindly the words of the fund manager.
• Another mistake that investors make on their journey to mutual fund investment is ignoring the sales load. A ‘sales load’ also known as a ‘sales charge’ is of various kinds; front loads, deferred loads, back loads, etc. A sales load is basically the fee or commission that is paid to the fund manager who is handling your investment on your behalf. Read up on this aspect carefully before investing.
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