Mutual Fund SIP | Keep these things in mind while investing in mutual funds, you will get more benefits
Mutual Fund SIP In today's growing investment scenario, there are many people who do not invest directly in the market keeping the risk in mind. The faster your money grows in the stock market, the greater the risk of loss. Mutual funds are a great option for such people. The risk in mutual funds is lower than direct investment in the market, but being a market linked scheme, it cannot be called completely risk free.
Know the risks of mutual funds
For those who do not want to invest in traditional methods of investment and expect good returns, market experts give the option of mutual funds. But there are market risks associated with mutual funds. Therefore, you should also be aware of all the risk factors associated with any fund in which you are investing. Risks may vary from fund to fund. There are a few things you can do to measure the risk of a mutual fund. Factors such as company management, funding conditions, interest rates, country's economy, geopolitical situation can increase the risk of investment.
sharp ratio
From the sharp ratio, we can know the risks associated with the investment fund. With this, you can also compare funds. This allows us to better understand the risks and returns of the two funds. The Sharpe ratio is the fund's return minus the risk-free return plus the standard deviation of returns.
standard deviation
Fund volatility can be measured by standard deviation. For example, let's say the fund's average annual return is 13% and the standard deviation is 2%. This means that the returns may be more or less than the two. Note that the higher the standard deviation, the higher the volatility of that fund.
R-square
Fund performance is measured quantitatively by R-Square. It can predict the performance of the fund, making fund selection easier.
beta
Beta helps measure the relative volatility of a fund. Therefore, estimates are issued regarding fluctuations in the fund. The benchmark being greater than one indicates greater sensitivity of the fund. Furthermore, being less than one means it is less sensitive to the benchmark. Moreover, if the beta is one, it means that the fund can move market-wise.
Disclaimer : Investing in mutual funds and stock market is based on risk. Before investing in the stock market, definitely consult your financial advisor. tezzbuzz.com will not be responsible for any financial loss.
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