Track them don’t just stack them:

Just how you nurture a plant and watch it while it grows. Think of Mutual Funds as your money plant that needs to be checked time and again. And unlike shares that need constant tracking, mutual funds are less tedious and manageable:

#1. Verify the amount invested: 

Verify the amount you’ve invested from your consolidated account statement. Check the scheme name and plan in these statements as well. The Consolidated Account Statement gives an overview of all mutual fund investments that you’ve made under your PAN. This statement is issued either as an email or physically once in six months if there were no transactions during the month. Also, don’t forget to cross check the amounts transferred into your bank accounts and deducted from your bank account when the mutual fund reports are issued. If you have invested in fixed income funds, verify whether you are receiving a regular income from the mutual fund.

#2. Keep a record:

Keep a record of all your mutual fund investments because this will make it easier for you to sell your mutual fund units smoothly. Keep records of the folio numbers given when you bought mutual funds. These help you to find out the value of your investment and help make any buy/sell transactions. For SIP investors record the NAVs and dates of purchases for tax purposes. You could use an excel spreadsheet or portfolio tracker tool like Moneycontrol for this. 

#3.  Occasionally read up on MF announcements:

For this, you’ll have to read through all the emails  (some unnecessary spam emails as well) from time to time, sent by your mutual fund company for any important announcements. For instance, if your fund manager changes it is important to know why because that might impact returns on your portfolio. Also, watch out for mergers of schemes as this might affect your short-term capital gains.

#3. Monitor fund performance

Monitor your fund performance time and again by comparing the performance of your fund with similar funds available in the market.  A short-term drop can be neglected if you’re in it for the long run. But if your fund shows signs of consistent underperformance compared to other funds, it’s better to exit it before you lose out on any more. Evaluate your fund every year and don’t just invest in one scheme because you had in the past. 

#4. Review and rebalance your mutual fund portfolio occasionally:

Over time, your risk ability and objectives might change. That’s why to review and rebalance your mutual fund portfolio in line with these is important. This means if you feel like you cannot handle the stress of equity funds then reduce your exposure to that and increase debt funds. Even within a fund if you feel the manager is taking an undue risk by taking high exposure to one single stock or sector then it should be a cause for concern. But don’t always panic, regular shuffling of your investments in a fund is part of the fund manager’s job. 

#5. Exit the fund if it reaches the ‘danger zone’

If any mutual fund is showing any consist low return when the economic conditions are steady, it a sign that one needs to exit the mutual fund. They should withdraw the fund immediately without considering any return on it. Danger zone can be avoided if you keep a tab on the mutual fund announcement and news. Danger zone not only limits to the mutual fund company but the investor as well. It is important for the investor to know your risk level and objectives. As an investor, if you’re confused about this then you’ll never be satisfied with your investments.  

 


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