Mutual funds are those which pool the money of many investors so as to invest it into stock markets on the behalf and for the profit of their investors. While investing in mutual funds people should take care that they do not make the given below mistakes –
1. One should never look at the NAV only, that is it is not necessary that a mutual fund quoting at lower NAV is cheap as compared to other mutual funds which may be quoting at higher NAV.
2. One should not make a lump sum investment in mutual funds rather investment should be done periodically.
3. One should not invest too much in dividend related mutual funds rather one should invest in growth mutual funds as they tend to give better returns to investor in the long term.
4. One should do a proper study of mutual fund in which one is investing by looking into the past history of the company which is issuing the mutual fund, and also about the past performance of the fund manager who will be handling the mutual funds.
5. Many people tend to invest in too many mutual funds, as it is difficult to keep an eye on the all mutual funds performance therefore ideally one should not invest in more than 5 mutual funds at a point of time.