Your guide to mutual funds

Sometimes market is tougher to understand but yet you want to make the most of it to make money and how? By investing in mutual funds which are those funds where your money is put on worthy assets by your fund manager. These over the years have proven to be the funds which have given returns to the long term investors who have no knowledge about stocks or market. But not every investor makes money as some funds are good and some are bad ones and the key lies in selecting the good ones for long term investments. These funds are opted by investors who plan their retirement to benefit from returns and profits after retirement and due to this the funds are popularly called as retirement funds. As an investor in these funds you are also exempted from paying tax in many countries and hence they are also called as tax savers or tax funds.

What are the benefits of investing in these funds?

These kinds of funds are ideal for people who do not have the time and skill to manage their own portfolio. When you invest in these funds your funds are managed by finance managers or fund managers who have sound knowledge about the market. Thus, your money is managed by financial professionals if you invest in these funds and you never have to worry about your individual portfolio unlike stocks.

These funds have the advantage and benefit of diversification where your investments options are diversified or widened across different companies and assets which otherwise as investor in stocks will cost you a lot of money to have a portfolio of diverse assets. As an investor of these funds you can gain a lot of returns from diversification and asset allocation.

These funds unlike stocks offer high liquidity

These funds offer the benefit of withdrawing your investment whenever you wish. Though funds take a few days to transfer your money most often it is immediate as the funds vary in close knits with banks. Unless your funds have a pre specified lock in period you can withdraw your money or investment as these funds are highly liquid.

Funds are highly convenient and flexible as they have a wide range of schemes that will cater to every investor’s needs as tax funds, retirement funds, etc. A low transaction cost is yet another benefit enjoyed by investors of these funds which is not the case when you enter the market directly by investing in stocks. But only when you choose your funds wisely you will enjoy these benefits along with high returns. Market has both good funds offering great returns and bad funds that investors are lured into by fund managers or agents who want to make money. You must avoid such situations and by following a few simple tips you can wisely invest and gain from funds.

Tips for choosing good funds to invest in

Choosing the right funds to invest in is very important as an investor of these funds and certain pointers when followed will help you choose mutual funds that offer great returns. Generally stocks of these funds are basically classified as small. Medium and large caps stocks. And more often the key of earning significant returns lies in choosing small and medium stocks when compared to large caps. These funds returns are all about the asset turn over. Funds with fewer asset turnovers are worthy to invest when considering long term good returns.

It is very important to understand the working of the funds as to how the fund managers choose assets for your funds. The success rates and sound administration of the funds can be determined by previous track records rather than previous performance and most often successful fund managers employ this principal. Fund fees must be considered but your decision must not be completely based on it as there is no proof that higher fee-funds does fetch wider returns and vice versa. Annual fund fee of 10% for stocks fetching 35% profit is the generally good deal.

When you have very little or no knowledge of stocks and market but still want to invest for returns then these funds is just what you need as your funds and asset allocations are managed by finance managers. Hiring a finance manager as an individual investor of stocks is otherwise very expensive.