Mutual Funds store the savings of investors who share a common financial goal. Each scheme of mutual fund has different and separate features and objectives. Those who are new to mutual funds and do not know how to invest in mutual funds, following are the steps to be followed:
• To invest in the mutual fund, a distinct portfolio for each goal is required. The money will be required at different points of time. The customer should choose between diversified equity funds, fixed maturity plan or balanced fund, debt maturity fund. Choices are there for considering equity funds that invests in shares of company. Over long periods of time one of the risks of investing in equity are minimal and thus high rewards can be expected.
• The customer should decide as how to invest in mutual fund where there are a various types of fund. At higher level the customer should decide as how much to invest in equity funds and debt funds. On the next level the decision should be made to make a choice between the mentioned broad categories.
• The customer who does not know how to invest in mutual funds should monitor his/her portfolio. If the fund suddenly gives under performance the user should think of selling the units or should stop for further investments. But if the customer is making good money he/she should sell the units and put them in fund for a shorter time.
• The customer should go for a diversification in mutual funds. He/she should invest in different types of funds from different fund houses.
• Most of the mutual funds declare dividends. The user should construct the mutual fund portfolio with great careful thoughts.