Mutual Funds: Do SIP or Lumpsum...but do not ignore these 6 things while investing

You must have heard a lot about the profits from mutual funds, but perhaps you do not understand its risk factors yet. There are many risks in this market-linked scheme, so if you are a first-time investor in mutual funds, then you should especially know some things related to it.

Mutual Funds Investment: There are two ways of investing in Mutual Funds, one way is SIP, in which a fixed amount is invested in the market every month. The other way is Lumpsum, in which a lump sum amount is invested in mutual funds. Generally, the method of investing in mutual funds through SIP is more popular. Whatever way you invest, understand some important things before investing because you must have heard a lot about the profits from mutual funds, but you may not understand its risk factors yet. There are many risks in this market-linked scheme, so if you are going to be a first-time investor in mutual funds, then you should especially know some things related to it so that you do not have to suffer any kind of loss later.

Choice of funds is very important

The biggest risk of mutual funds is the stock market itself. However, the risk in this depends on the type of fund in which your money has been invested. Investing money in large cap or blue chip funds can reduce the risk, but if you are investing money in small cap funds with the possibility of good returns, then keep in mind that the possibility of loss increases in the market fall.

Changes in interest rates are also a big risk

Changes in interest rates are also a big risk for debt mutual funds. To get better returns in this, you have to look at many other things along with the increase or reduction in rates for the selection of the scheme. Experts believe that debt funds perform better when interest rates fall.

Risk is less than direct stocks

Even in the situation of market uncertainty, the risk in mutual funds is considered to be less. The main reason for this is that the money of the mutual fund is invested based on the experience of the Fund Manager. This increases the chance of better returns and the risk is reduced significantly compared to investing directly in stocks. But this risk is not eliminated.

Improve your returns like this

There are many types of schemes in mutual funds. Expert advice is very important to know which scheme can give you good returns because if the scheme in which you are going to invest is already giving very good returns, then the rapidly increasing inflation will not have much effect on it and you will be in profit, but if the scheme in which you have invested has low returns, then due to inflation its actual value decreases. In such a situation you are not very profitable. This is the reason why experts recommend investing in different schemes based on different risks and returns. So that your average return remains good.

Choose the best mutual funds like this

Make a list of top contenders for the best mutual fund and compare them. Keeping in mind the goal for which you are investing in mutual funds, check which one is meeting your needs. Compare their history, expense ratio, fund manager history, etc. This will help you a lot in choosing the best SIP according to your needs.

Consult a financial advisor

If you have no idea about investing in mutual funds, or even after following all the instructions mentioned above, you are unable to take any decision, then talk to a financial expert. He will help you in choosing the best SIP according to your needs. If you choose the right SIP for yourself, you will get better returns and will never regret it.