A Guide To Investing in Mutual Funds: Identifying The Best Performing Funds

Investing at an early stage of life is beneficial in the long run. With technology advancing each day, investment is as easy as ordering food nowadays. Just pick up your smartphone, sign up on the right app, and you are more than good to go.

However, when it comes to investments, mutual funds are one of the most sought-after investments as it offers pretty good returns if the investor is willing to take the risk. So, researching for the best performing mutual funds and putting your hard-earned money is the way to go. 

As a potential investor, you need to know that many types of mutual funds are available, each with a different investment objective and level of risk.  

What are mutual funds?

Mutual funds are basically investment vehicles that pool money from multiple investors in order to purchase a diversified portfolio of securities. These include bonds, stocks or other assets. It is a popular investment scheme among investors as it offers a diversified portfolio of assets, ultimately reducing the risk while offering the potential for higher returns compared to keeping money in a savings account. 

So, here, when an investor purchases mutual fund shares, they are buying a portion of the overall portfolio, and their returns are proportional to the performance of the funds. Also, the investor need not worry as mutual funds are managed by professional fund managers who make the decisions on their behalf. 

How to identify the best performing mutual funds?

  • Define Investment Goal

Before you start digging, defining your investment goal and risk tolerance is essential. This helps in narrowing down the research to the funds that are aligned with your respective objectives. 

  • Historical performance

It’s important to have a look at the fund’s historical performance. This helps in getting an idea of how it has performed over time. 

  • Ratings and Reviews

You’ll come across many independent rating agencies that offer ratings and reviews on mutual funds. This is very helpful during the evaluation stage. 

  • Fund’s holdings

Ensure you review the fund’s holdings to align with your investment objectives and risk tolerance. Look for mutual funds with a diversified portfolio and mix of assets, as it helps reduce the risk. 

(Tip: Use a mutual fund calculator before investing.)

How to invest in mutual funds?

Gone are the days when investment meant a short trip to the bank. Nowadays, if you have an internet-enabled smartphone and the right application installed, you are more than good to go. 

Around three and a half months ago, I was planning to invest, so one of my friends suggested me the Bajaj Finserv application. Believe me, not only mutual fund investments, but this app offers many investment options. 

  1. Download the application from the Play Store/App Store
  2. Sign up by entering your mobile number 
  3. Go to the Mutual funds under the Investment Bazaar section on the home page.
  4. Explore and go ahead as per your suitability.

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