Investments through Mutual Funds

So you have done your calculations and arrived at a figure that you should invest regularly to achieve your goal. Now you have decided that some portion of your investment needs to be in equity. So which equity share would you start investing, so that you achieve your goal? It’s difficult, leave it to the professionals.

You have two choices, hire a portfolio manager or invest in a mutual fund scheme investing in equities. Now both the types of investments have its pros and cons. For investing using the services of a portfolio manager, you need to commit a big sum of money, also the upfront charges are high.

In a mutual fund, you can start with a very small amount and the charges are also less. So now that we have decided to invest in a mutual fund investing in equities. The next hurdle begins. Which fund should I choose, yes we said equity mutual fund, but do you know that there are hundreds of equity mutual funds.

So let us now narrow down our search. We should chose a fund whose cost is the lowest. The cheapest equity mutual fund is the index fund. It is cheapest because the manager tries to mimic the index and you do not have to worry about the stocks chosen by the fund manager, since he has to mimic the index.

If you look through the performance data, you will find that most of the index funds have actually beaten the index. So the next thing to do is select the fund which has done well over a period of time. It’s always better to go by performance that to go for new index fund. In a new index fund, you cannot be sure that the performance will be good.

So if you are new to investing, start with an index mutual fund with a good track record.