FY25 Financial guide: 7 tips for mutual fund success

What is a mutual fund?

A mutual fund is an investment fund that pools money from many investors to purchase securities. Mutual funds have become one of the most popular investment avenues for investors, given the wide range of products based on varied investment requirements. Here are 7 tips to avoid any hassles and maximize returns while investing in mutual funds for FY25.

Research thoroughly

Before investing in any mutual fund or scheme, it is important to know about the ins and outs of that investment option. Researching the funds investment objectives, past performance, expense ratios, and risk factors is important.

Overlook asset allocation

To get good returns on mutual funds, diversification is key, as it helps spread out your risk. Diversify across various asset classes, like equities, bonds, and commodities, to manage your risk, maximize the returns in your investment portfolio, and minimize the impact of market volatility.

have a clear objective

Investments are made to fulfill some or another financial goal. So, investing without any clear objective in mind may lead to mismanagement of finances. It is important to align mutual fund investments with your overall financial goals.

assess the risk profile

Assessing your risk profile is important to minimise any losses whatsoever, in terms of the level of risk you are willing to take as well as the level of risk you can afford to take, to make sure that you only choose mutual funds that are aligned with your risk endurance capacity

Buy low sell high

The lower the net asset value (NAV) of a scheme, the better. Every investor knows the mantra, buy low sell high. The point is that one should never invest in Mutual funds just because the NAV is low. Conducting thorough research to figure out the NAV, is of importance.

Avoid chasing past performance

It is appealing to invest in funds that have a history of stellar performance and returns. However, prioritizing consistent research and having clear objectives, is important to make a wise investment decision.

avoid panic decisions

This market is a chaos filled with panic and chaos. Investing on impulse without clear objectives and selling when the market is low is a common mistake, which is avoidable by keeping a cool and calm mind.