MUTUAL FUNDS

Investing in mutual funds has become increasingly popular due to their promising long-term returns. Regardless, various factors must be considered when choosing a mutual fund. 

Here are five factors to keep in mind before investing in mutual funds:

If your goal is to secure retirement support, a growth-oriented mutual fund would be ideal. Whereas for short-term uses, an income-focused mutual fund might be more suitable. 

It is important to choose a fund that best fits your overall investment portfolio and risk tolerance. For instance, equity mutual funds invest primarily in stocks, leading to potentially high returns but also high risks. 

It is good to look at a particular fund's past performance to understand its returns across different time frames. This can help you understand whether the fund is consistent or not. 

Mutual fund companies ask you to pay a fee in cases of early withdrawal. This is an exit load charge and can diminish your returns. This charge varies depending on the mutual fund you choose to invest in. 

Mutual funds impose an expense ratio, which is the yearly cost of managing the fund as a percentage of its assets.  It is important to compare expense ratios across different mutual fund schemes.