Partner With Us

7 things new Mutual Fund investors need to know

Mutual funds are an excellent tool that helps build your investment portfolio. But if you are new to the world of mutual funds, it’s essential that you first learn the nuances to reap maximum benefits.  Here is a list of seven things that you need to know to make the best investment decision:

  1. Don’t time your investment:

    It is impossible to time the market and make your investment. Therefore, avoid doing that. Mutual funds can provide returns over a period of time, irrespective of the market fluctuations. Develop a habit of investing a fixed amount regularly that will get more units of mutual funds even when the markets are bearish.
  2. Look beyond NAV:

     Many consider the Net Asset Value or NAV as an indicator of the performance of a mutual fund. However, it’s best that you do not look at NAV as the sole deciding factor. Fund management, historical returns from a mutual fund, market volatility are crucial elements that you should take into account. Make it a point to read the scheme information document and the key information memorandum thoroughly before you make a decision.
  3. Seek help:

     A well-formulated investment strategy will help you get good returns from mutual funds. If you find it overwhelming to come up with a plan on your own, seek help from professional financial advisors.
  4. Stop looking for best returns:

     It is not necessary to look for the best returns while selecting a mutual fund. Start by assessing your risk appetite and investment horizon and accordingly, choose a mutual fund that fits your profile. Excessive focus on returns without weighing in the risk involved can cost you dearly.
  5. Diversify your portfolio:

     Did you hear the saying “Don’t Put All Your Eggs in One Basket”? The same applies to mutual funds as well. It is important to diversify the mutual fund portfolio across different schemes which invest in different sectors/asset classes to minimize the risk. At the same time, don’t feel tempted to invest in every mutual fund scheme that comes your way. That can dilute your returns and prevent you from building a good portfolio.
  6. SIP or lumpsum:

    If you’re wondering whether to invest in SIP or lumpsum, you must first understand your reason for investment and check what will work better for you. Take your pick from the two modes of investment based on your profile. Opting for a SIP will be a better option as it instills the discipline to invest a fixed amount every month.  If you have sufficient surplus income, then you can consider a lumpsum investment, and can choose the suitable fund as per your requirement. You can also choose to invest a lump sum amount in a liquid fund and can choose to start the Systematic Withdrawal Plan (SWP) to an equity fund if planning to invest in equity.
  7. Consider exit loads and expense ratios:

    If you exit a mutual fund early, you may pay a penalty known as exit load. Typically, equity mutual funds charge an exit load of 1% if you exit within one year of investment. Debt mutual funds have varying exit loads. Similarly, an expense ratio is the fee charged by a fund house for managing the mutual fund. It includes operating fees, legal costs, service charges, etc. A very high expense ratio can reduce your returns. Therefore, ensure you consider the exit loads and expense ratios before investing in a particular fund. 

 So, are you ready to start your mutual fund investment journey? Open a trading account with ICICIdirect now and get started. 


Disclaimer: ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. AMFI Regn. No.: ARN-0845. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

Most Popular

  • 27 Sep 2021
  • ICICI Securities

The Five Rules of Investing in Equities

Investment in equity should be made by following certain rules. There are five rules of equity investments. They arise from an understanding of the stock market and mitigate the chances of making mistakes and incurring losses.

  • 27 Sep 2021
  • ICICI Securities

Investment Rules: 5 Thumb Rules of Investing in Market

While you work for money, suitable investments make your money work for you. How you take control of your finances determines the growth of your wealth and additional income streams. Click here to read about the five golden rules you can follow while investing.

  • 15 Sep 2021
  • ICICI Securities

5 Most Popular Reasons for Switching Bank

In the beginning, you would hear from them quite often. But of late, you're noticing more and more signs that it's no longer working. We are referring to your relationship with your bank. Click here to read how to recognize the red flags in your banking relationship and why it might be a good time to end the bond.

  • 15 Sep 2021
  • ICICI Securities

How Intraday Trading Works? Detailed Ideas

Intraday trading in India has been gaining momentum of late. It is no longer the option of only trade pundits.

  • 15 Sep 2021
  • ICICI Securities

What is Intraday trading? A Beginner's Guide

With the advancement of technology and increased knowledge about the stock market, trading is no more a domain dominated by stock pundits.

  • 05 Sep 2021
  • ICICI Securities

Is it Good To Invest in Cyclical Stocks?

Akin to how the pedals of a cycle go up and down as it moves forward, the share price of certain stocks goes up and down in accordance with the economic cycles a country goes through. 

  • 05 Sep 2021
  • ICICI Securities

A primer on Fixed Maturity Plans

If you happen to have some surplus funds which you don’t need for a specific period, but you don’t want to take the risk of investing this money in the stock market, you can very well put this money in a Fixed Maturity Plan or FMP. 

  • 05 Sep 2021
  • ICICI Securities

How to Choose the Best Equity Mutual Fund

You must have heard a lot about investing in mutual funds. But before jumping on this trend you need to assess a mutual fund scheme according to your goals, investment horizon, risk profile, liquidity needs and many other factors to find a suitable match. 

  • 05 Sep 2021
  • ICICI Securities

A Beginner’s Guide to Monetary Policy Tools

The Reserve Bank of India has the incredibly crucial responsibility to formulate the monetary policy. The main objective of monetary policy is to control inflation and provide a conducive environment for the country's economic growth. 

  • 05 Sep 2021
  • ICICI Securities

Buying Penny Stocks and its Risks

There is a specific category of stocks whose prices are very low and they seem to yield exponential returns. But do you know that investment in such stocks could be risky? 

Open an Account

Sign Up for Free


Please use the mobile no registered with Aadhaar.

OTP sent to +91 1234567890

Didn’t received OTP? Resend



Get Research Backed Recommendations.

Download The app now

or Scan below QR Code To download app