You want to keep money in mutual funds. But which fund to keep? More than two thousand different categories of funds are being sold in the market. There are different funds in each category. Some of them are doing very well, while others are not. So your pressure is to choose the most efficiently managed fund and invest in it.
But before we get into that, let’s see what Sebi is saying for you. SEBI’s permission is required to create any fund. SEBI for the benefit of investors.
The new classifications of mutual funds are:
A) Equity project
B) Debenture scheme
C) A mixture of equity and debt securities
D) Goal-based projects
Each company has to choose one of these five projects. SEBI has stated what kind of shares or bonds can be invested in any category of investment. Companies have to invest according to those guidelines.
The main purpose of this class division is not only to facilitate the search for projects for investment but also to see how easy it is to calculate the risk. With few exceptions, no company can market more than one project in a single category. SEBI has made it very clear who will be called Large Cap, Medium Cap or Small Cap. So no company can classify shares as they wish.
And projects that are goal-oriented (such as saving for retirement income, or saving for the future of children) have the opportunity to withdraw money within a certain period of time if you don’t like it after investing.
Here is what SEBI tells you to look at before investing:
A) Find out how much the law will be with you if there is any difficulty after the investment.
B) Know the details of each particular project to understand the risks. Find out the risk of that project according to the risk-o-meter. Understand your ability to take risks this time. Keep in mind that any savings scheme carries a small risk. But your investment will depend on how much risk you are able to take. The higher the risk in that project, the higher the return. Again, the risk of investment loss is the same. So choose a project risk knowing how much money you lose will not put pressure on your pocket.
C) Do not invest in multiple projects of the same category. Fill the savings bag with various projects. This will reduce the risk.
D) Do not sit idly by. Set a deadline for each investment. From time to time find out how your invested projects are doing comparatively. If not, try to understand why. If you don’t like it, feel free to withdraw money from that project and invest it elsewhere.
Keep in mind that wherever you keep money, there will always be some risk. Somewhere just the risk of return and somewhere the whole investment. Therefore, every decision-making body, including SEBI, is trying to protect the interests of investors. But it is also true that how much risk you take depends on your risk appetite. So first start measuring your needs at the risk and goal and start walking the path of investment.