Ways to Maximise your Returns With Mutual Fund

Many investors choose mutual funds in the hope of getting higher returns that can help them to beat inflation. While mutual funds can generate good returns in the long run, it is important to do your own analysis and choose your funds with care.Your risk propensity and life stage are factors that need to be considered while choosing funds. There are several ways in which you can maximise your returns from MFs. Some of them are:

Before investing in a mutual fund, you need to gauge its fundamentals and long-term performance. Ideally, you should opt for a fund that has performed well across market cycles and has robust fundamentals.It’s important to check out the underlying assets of the fund and make sure they are sound enough. Today, there are many websites where you can read reviews of a fund and check its performance.

If you invest in mutual funds, you would know that they are subject to market risks. To maximise your return, you need to stay invested for a long period, particularly in case of equity funds . MFs generally give better returns if you are willing to remain invested for 5 years or more.This, however, varies across funds. Having said that, consistency is key to better returns in mutual fund investment. Time in the market is more important than timing the market in case of mutual funds. If you have selected a fund with robust fundamentals, ensure to remain invested for a long period.

Direct plans are those that are sold directly to investors without involving distributors or agents. By choosing direct plans, you can avoid the commissions that would be payable to them, thereby maximising your gains.Generally, the expense ratio of direct plans is almost 1% less than the regular plans. In the long-term, investing in direct plans can make a significant difference to the accumulated corpus.

Mutual funds can help you create wealth in the long run for essential life goals. As evident, funds should be chosen based on their long-term performance along with their fundamentals. It is equally important to review your portfolio periodically to check the performance of your funds.Compare your fund performance with benchmark indices to find out where they stand. Any fund that has not performed well for a long period can be replaced by a better performing fund. You can seek help from a professional if required.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.