Common Mistakes in Buying Mutual Funds: Article: Page 102



Buying mutual funds at low NAV: In the initial stage, all most all first investors will seek for low NAV(Net Asset Value).

What is NAV(Net Asset Value): For example Some X company mutual funds are Rs. 100 per unit with the same price in the new issue. Some Y Company will have Face value is Rs. 100 with the good of that company Its NAV is Rs. 150.

So in this Y Company Face Value Rs. 100 + Good Will is Rs. 50 = Rs. 150/- is the NAV.

Generally New investors will prefer X company only. What will be the preferences? we should select. This is in the next topics, you can observe.

Investing in Mutual Fund to earn a dividend: In the above example X company will give Rs. 20 Dividend. Y Company will give Rs. 40 dividend. So we should select Y Company for purchasing, because, the main motto of mutual funds is to Earn Dividend only.

Observe investment Objectives: Every Mutual Fund Company will have its own commitment for utilizing funds. Every investor before purchasing Mutual Funds, they should read objectives of the investment of that company, then only you have to invest.

Expectations on Mutual Funds: This is most important thing. Any type of Mutual Fund cannot reap returns before 3 years. All of the investments company will fund on specific sector, to reap the profits, we should wait, at least 3 years. Do not expect any type of returns before 3 years.

After 3 years, you can see the returns on your investments, then it will give regular returns annually, Up to that time, we should wait.

Invest in Multiple Sectors: Generally Surplus funds, Investors will fund in one type of sector only all their funds, For example Constructions one sector, Gas and petroleum another sector.

For every sector season and un season will be there. So If you invest in one sector, If you face there frequencies. Suppose if you invest in multiple sectors, you can recover well with all these deficiencies in a good way.

Wishing you all the best,

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