3 things to remember before starting Mutual Fund investment...
3 things you must know before you start investing in Mutual Funds.
Today in this informative blog, we will understand exit load, expense ratio and interest rate with one BONUS tip to choose the best Mutual Fund for yourself.
Let's understand the above terms in detail: -
1. Exit Load- Exit loads on mutual funds are the fees charged by fund houses to the investors who wish to exit partially or completely within the lock-in period of that MF's scheme.
My suggestion would always be to select MF which as no exit load (basically I mean to say that select those MF who have 0 lock-in period). There are many such funds available on various platforms like Zerodha Direct, Fyers Direct, Growww, etc.
One of the best mutual fund without exit load is ICICI Prudential Nifty 50 Index fund and many more like this are available.
2. Expense Ratio- In mutual funds expense ratio is the fee charged by the fund houses for managing investor's money. You must always select an Mutual fund which has lower expense ratio. Ideal ratio is given at end of this blog. An expense ratio is a ratio in percentage of the AUM i.e., Assets Under Management.
Now, you might be wondering that when is it charged, monthly or annually? Mostly all fund houses deduct expense ratio annually from the invested money or profit(no need to pay separately).
Also by selecting MF with lesser expense ratio means that more part the profit earned by the funds are distributed to investors (thus, increasing your returns).
3. Intertest Rate- Interest rate is basically the RoI (return on your investment) expected from your MF through it's investments. Ideally high interest rate means more profit in a longer run but you must always view the past performance of any MF in it's factsheet before investing. I will always suggest to choose an MF which gives a stable growth annually as higher interest rate in 1 year does not mean that MF would keep giving same return always. Example, Index funds are one of the good bets to invest as they are giving stable investment from more than past 5 years.
4. BONUS tip- While selecting any mutual fund, always check it's type whether it's GROWTH fund or DIVIDEND/IDCW payout fund. Growth funds are always a better option, to know more about checkout all about mutual funds blog.
To check any mutual fund's overview click here.
I'm attaching an example screenshot of how does the fund's overview looks like where all required details are mentioned.
ACTION steps:
1. Choose a Mutual Fund which has:
a) No exit load
b) Less expense ratio (less than 0.5 is good and less than 0.2 is best)
c) Stable interest rate known as CAGR
Link to join my Telegram group to so that you don't miss any finance related blogs in future.
START investing right now and take your first step to attain financial freedom.
I wish you all a bright life ahead with financial freedom. Kindly SHARE this useful blog with your family and friends. All the best!!!
Information sahi milegii yhi
Comments
Post a Comment