Guidelines to Select the Right Equity Mutual Fund Schemes

Mutual funds have been an investment option for the investors since 1965. However, with time and owing to the benefits associated with such an investment, mutual fund investment plans are considered one of the most effective speculations that offer high returns in the end. Investing in a mutual fund scheme in today's date is certainly a simple task. But selecting the right equity fund or choosing an appropriate scheme based on goals and risk factors is not so easy. So as to assist the investors to select the right fund, many investment experts and financial planners have emerged with their popular mutual fund websites. However, there are many individuals who actually do not favor the suggestion of seeking the help of mutual fund advisors. Here are some effective guidelines

on how to select the right equity mutual fund schemes.


Not to Start Investments Blank Minded: There are many investors who look for nothing while
committing in any investment portfolio. Without any clue, they are ready to invest directly in a
mutual fund scheme. As a consequence, they do not have any idea about what they are selecting,
why they are selecting, and what will be their future consequences. Even there are investors who
are totally aware of the differences between debt schemes and equity schemes. Thus end up
selecting the wrong one. Such an approach leads to several negative pitfalls. Therefore, it is
mandatory to have a sufficient knowledge related to mutual funds before making any such wealth
creation investing schemes.


Not to keep focus on just returns: Mutual funds are associated with risks. No doubt. Therefore,
if someone is keeping focus mainly on wealth creation instead of the risk factors, then there is a
high chance to encounter several losses. To be more precise in this ground, some investors who
have a small risk appetite often prefer to choose small-cap funds and sector funds. As a result,
when they want them to sell in order to avoid risks, in some cases, they have to pay an extra
amount for the early exit. Hence, it is important for every investor to study the portfolio from A to
Z and learn about the terms and conditions including the risk factors and time duration. It is
always better to look for risk-based fund recommendations to remain in a safe side.


Not every mutual fund scheme is five-stared: All mutual fund schemes are beneficial. This is
utterly a wrong concept. Not every scheme is made for everyone. One has to be skilled enough to
choose the best out of the starring ones based on their goals. Choose one or two schemes that
belong to the category aligned with your risk profile. Yet, there may be some more great schemes,
but they are meaningless if they don't serve your needs or matches your risk profile.


Stop looking for diversification: There is no hard and soul rule that an investor has to add
multiple schemes so as to get a diversification model. This is not a way to reduce risk factors or
maximize profits. In fact, adding too many schemes may prevent the monitoring process to some
extent. Not just that, too many schemes in the same category may even result in duplication of
portfolios of schemes. To avoid such agony in the near future, it is better to make investments
acting smartly.