Strategies for Intelligent investment in Mutual Funds

Mutual funds are the best friend for an investment focused person which is giving professional management to his money and better profit in long run. Thos who are not having enough time to study, research for a direct stock investment, can certainly opt the path of mutual fund to build a better investment portfolio.

Below are some guidance and steps for a mutual fund investor to be aware before making any investments with any mutual fund products.

1. Identifying your goal is most important prior to build an investment portfolio.

2. Identify the risk level you can bear.

3. Always use SIP (Systematic Investment Plan) to build mutual fund portfolio. An SIP enable you to manage your money properly and providing security from fluctuating market as well as make you a disciplined investor.

4. Learn about the fund you are investing.

5. Research about the fund performance for at least lat 5 years.

6. Remember, better past or present performance of a mutual fund is not a guarantee for future performance.

7. You are required to monitor your portfolio at least once in a month.

8. Applying directly to a mutual fund other than agents, will give you benefit from agent commission.

9. Find out what is the entry and exit load for the fund.

10. Compare the fund with its peers like competitors to identify the costs like entry or exist loads.

11. Have a long term perspective. Equity investments will give handsome returns in a long run only.

12. Read and understand the Key Information Memorandum before applying to a fund.

13. Identify the fund objectives clearly. There are lots of mutual funds have the same concept and you are buying all this funds will not give you the expected returns.

14. Find out what are the allocation methods the fund is using.

15. Find out where the fund focused too. Is that a large cap, mid cap, small cap or diversified fund etc..

16. Understand, a proper diversified portfolio must have proportion of large, small, mid, diversified, index, debt, international funds in a proper proportion.

17. Identify the fund house performance for several years.

18. Identify the fund manager, if possible, his history, the funds he is managing and present performance of that funds. This will enable you to identify the possible returns from a fund managing by that manager.

19. Identify the possibility of the sectors the fund focusing too… a growth oriented funds with possible booming areas in long run, can give you enough returns.

20. Immediately avoid a fund house if they are not prompt or not interested to give proper reply to your queries.

21. Avoid funds that was not at all performed well in the past.

22. Never jump to New Fund Offers (NFO). Investing is NFO is not advisable because of non availability of fund performance and any kind of data that required to measure a fund.

23. Never invest to any mutual fund by the advise of an agent or someone providing tips.

24. Collect information from internet sources about a fund prior to investing on the same.

25. Compare the fund performance with its bench mark. If the fund is an underperformer for last several years, immediately avoid that fund.

26. Comparing the fund with its peers from different fund management company would give you an exact idea about the fund performance.

27. Always have mix of funds. Adding Large cap oriented funds to the portfolio will protect your money from heavy volatility because large cap funds commonly volatile in a very low manner. While mid cap and small cap funds will give your very good returns in the long run.

28. Always have a mix of debt and equities. There are various kind of funds available in the debt world, which can select depends on your risk profile.

29. Always have nominee when you applying for a mutual funds.

30. If you do not want regular income, always select Growth option while investing. If you are focusing to regular income, then you can select Dividend option instead.

31. Be a patient and disciplined investor. These are two must have qualities for an investor and history prove the result of these qualities from the life of investment legends like Warren Buffets, Benjamin Graham etc..