Tips for MF investors

I think it’s important to know how much risk can one take? We have to  understand the risk appetite. It depends on many factors like source of earnings, number of dependents etc. Investors with a low risk appetite should go for blue chip funds or diversified equity funds, while investors with a high risk appetite can go for a mix of blue chip and mid-cap funds.

Investors should look at the track record of mutual funds before taking investment decisions. For evaluation of a mutual fund's performance, investors should look at the fund's total returns – (dividends, growth, tax savings etc). This information can be accessed from the mutual fund's periodic reports.

Apart from the above mentioned points I think investors should invest in mutual funds with a long term perspective. This way, your investment gets more time to grow, with the advantage of compounding. Time also creates a cushion to absorb risks, and hence reduces the risk of losses.