In order to save money smartly and build wealth, it is very important to plan things accordingly. Not only does financial stability offers an opportunity to enjoy a quality life, but it also helps a way out of the uncertainties of life.
Around six months ago, I was planning to invest in Mutual funds and was on the hunt for best performing mutual funds. I knew that systematically putting aside some chunk of your salary could help steer you out of many hurdles and obstacles.
What are mutual funds?
Mutual funds are an investment scheme where many investors pool their hard-earned money to earn returns on their capital over a fixed tenure. This corpus of funds is managed by professionals known as Fund managers or Portfolio managers. Further, it is their responsibility to invest the corpus in different securities such as bonds, stocks, etc., and seek to provide potential returns to all those who invested.
Therefore, then the profit/loss on the investment is shared collectively by the investors in proportion to their contribution to the fund.
(Tip: If you wish to save on taxes, one of the best options is the tax saver mutual funds.)
Here are the top factors on how to choose the best performing mutual funds –
- Goal
The prime step while choosing funds is first to consider your financial goals. Further, calculate the actual value of your goals as they mean the current rate plus inflation over the investing period.
- Performance
Fund performance matters and should be considered for a reasonable time period before investing. So, ensure that the fund you are planning to invest in has been able to beat its benchmark over three, five, or ten years.
- Allocation
Before going for the funds, asset allocation is essential. This means how much of your money you can allocate to which types of mutual funds meet your financial goals, considering your risk appetite.
- Risk
Different mutual funds come with different degrees of risk. So, when you search for the ‘best mutual fund to invest today‘ on the internet, ensure you do thorough research and accurately assess your risk appetite to arrive at the correct asset allocation for your portfolio.
Notably, when mutual funds were introduced in India, there was a lack of awareness among citizens. However, with time, several platforms now provide the necessary resources and even the option to invest. Honestly, I’ve only invested in Mutual Funds via such a platform.
Bajaj Finserv is my go-to application for all digital payments like mobile recharge and broadband recharge, and when I was planning to invest, I did the same on this app only. It is highly recommended! Moreover, before investing, make sure that you use a mutual fund calculator to experiment and get to know what’s best for you.
(Note: This is not a promotional write-up. Readers are free to use any platform as per their suitability.)
