Mutual Fund in Detail - 2

Risk in Mutual Fund

Risk is there in all instruments which involve money, Mutual fund is no exception. Risk can be minimized if you chosen a best mutual fund and stick to it with for a considerable duration say more than 2 to 3 years. Adventure can always bring in the thrill only when taken with proper risk protection, or else it can take your breath away.

Real estate is an asset, but it can bring in woes of EMI if we don’t have enough money and in the form of vacant land it can lead to the problem of encroachment. Gold brings in good luck, but we need to have safety lockers to protect that and if kept in bank we need to pay some amount. So there is a risk involved in all these assets. When it comes to mutual fund, invest as per your needs, invest as per your risk taking ability and review periodically to protect from complete erosion, here is the list of mutual fund that have generated more than 15% in the last 15 years,

Mutual fund	Last 5 years return	Since Inception	Year of Inception
UTI MNC fund	28.63	20.79	1999
UTI Equity Fund - Gr *	18.97	19.9	1999
HDFC Prudence Fund - Gr. *	17.52	22.4	1999
Tata Balanced Fund - Plan A - Gr *	21.66	19.88	1999
SBI Pharma Fund - Rgular Plan	34.24	23.25	1999

If you invested just 1000 per month in Tata balanced fund from January, 1999 till now you would have paid 1, 97,000 and the corpus you would have amazed is 12,27,521. The amount has grown more than 12 times in 16 years. Think of any other instrument which you can amaze this much in these many years which is liquid during its investment period.

Choosing a mutual fund?

Here comes the difficult part in choosing mutual fund, if you had the knowledge to choose from more than 44 fund houses then you are really great in investing. If you are completely new to mutual fund investments, follow the simple steps when you approach a financial planner or brokerage houses while choosing the mutual fund,

     1)      Plan for how much you want to invest in advance

     2)      Choose the mutual fund depending on the number of years you will not be in need of the money

     3)      Break down the amount you invest according to the goals, say money for child education, for         retirement, for buying home, for buying car etc

     4)      Ask the number of years the fund has been in the market and returns since inception

     5)      Ask the risk category it falls in, as of now High, Medium and low is available as proposed by SEBI

Finally once invested, monitor at least once in 3 months about the performance.

To make the most of your money, I recommend sticking with mutual funds that don't charge a commission when you buy or sell.  – Suze Orman

Your Money – Enjoy the power of money compounding without charges while buying and selling