How to choose best and top performing mutual funds in India 2020

When we talk about investing, mutual funds is the great way of investing as it doesn't want too much effort to choose particular stocks and watch that company for years. Many of us don't know much about stocks and investing in stocks. And then mutual is best for investing in stock market and generating more return than money in your bank account. When we want to invest in mutual funds then there is great confusion on which fund should we choose. But here are the simple and easy steps to find out best and top performing mutual funds. 

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What is mutual fund?

When you invest in mutual funds then you indirectly invest in the companies in the world. By investing you give your money to that mutual fund and they use your money to invest in multiple companies or buy stock of multiple companies. 

Benefit of investing in mutual funds

You invest in multiple companies at a time. And you earn money without using your brain. 

So let's start our blog on, "How to choose best and top performing mutual funds in India 2020".

How to choose best and top performing mutual funds in India 2020

1. Know your goal and risk

Goal

When we talk about investing first thing you have to keep in your mind is when to exit and what is your goal. Your goal could be anything like creating wealth, saving for cars or vacations or your business anything that keeps you motivated and keep on track of investing. When we talk about creating wealth then you have to be more specified to your goal like For next 5 year I want to save or make $100000 from investing. The more you become specified with your goal to more your vision or your investing become clearer.

Risk

Now risk might not be for all the people but if you want to create an enormous wealth you have to take risk with your money to make it grow more. Risk is very health and helpful for creating wealth if it play rightly. Taking risk doesn't mean taking all your money and invest in risky mutual funds you have to diversify your investment. And for remaining investment define your risk and play it safe.

Let's say you invest monthly $1000 then you can say that I can take risk on 5% of my investment which is $50. So you can invest in some risky mutual funds with high risk but play it safe and research on that funds and then invest in that fund.

2. Type of fund

There are so many types of mutual funds but to most important is 2 types 1 direct growth 2. dividend growth

Direct growth 

When you invest in these funds after gaining some returns on your investment they reinvested that gained amount which directly helps your investment to grow more as your gains are also invested and help your investment to gaining more returns. If you are young then this is the best option for you it will help you to create great wealth in long term.

Dividend growth

When you invest in these funds then after gaining some returns you get some dividend money and remaining gain will invest for further growth. If you want dividend on your investment then go for these funds. Know the type fund you want and then invest in it.

3. Expense ratio or deduction 

Mutual funds companies charge your particular amount on your investment as a expense ratio. You have to check to expense ratio of that fund and then compare it to expense ratio to that category funds. 

If you want to check for short term mutual funds then you will go to the short term category expense ratio and then compare it to your mutual funds. 

Tax deduction

After investing in mutual fund government will charge you particular amount on your investment. These amounts may vary from fund to fund. So you have to check tax deduction on you investment. 

Tip: - By investing long term you can save much tax on your investment.

Withdrawal charge

If you want to withdraw your money within some short period of time then that fund will cost your some deduction. Mostly these deductions are around 10% to 15%.

4. Check funds or fund manager track records

If you are giving you money to some mutual funds then it is important to check the record of that fund. Check mutual funds record of long term not just last year return and calculate an average of your mutual funds return and if you are satisfied with that return then invest in that fund. 

Also, check to record of the manager of that mutual fund. Many times people invest in the mutual funds with great track record and the fund manager is changed recently. So there investment shows negative return and people don't know the reason for this and they keep investing in it with hope that in the long run the funds will show us great return. So make sure to check fund manager and his track record.

5. Check the size of mutual funds 

There is an argument between peoples that large funds doesn't give great return and doesn't best the bench mark. But there is much evidence which shows us that maximum time funds with lager capital gives us great return in long term. Although it depends on fund manager but if you choose funds with smaller capitial it is difficult to predict the performance of that funds and maximum time it won't outperform and create great returns. So make sure to diversify you investment into large sized funds or medium sized funds.  

Tip:  - Don't put all your eggs in one basket - Warren Buffet 

6. Invest in funds with foreign investment

What is more exciting than you invest in some of the great companies in the world like Amazon, Facebook and Apple? When you personally buy stock of this companies than it costs you great amount of money to buy one stock like amazon stock will cost you around ₹1,78,000. So there is an alternative invest in mutual funds with foreign investment. There are so many mutual funds who give us the opportunity. 

Best mutual fund is Parag parikh long term equity funds direct growth - Invest here

7. Choose best platform to invest 

Many platform costs you some hidden cost which will affect your investment in the long there. There are so many free and certified platforms which allow you to invest free no commission, no hidden charges and government certified. Grow app is best platform in india which will help you to invest free and it is a certified app. Many people is using that app to invest in mutual funds. Click here to invest 

Remember best time to invest is now.

Check our blog on Top 5 best index funds in India 2020.

So this is our blog on, "How to choose best and top performing mutual funds in India 2020." These blog is dedicated to how to choose top performing mutual funds in India. We hope this blog will help you to choose best mutual fund to invest in India. 

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