Mutual Fund 101: Top Questions to be asked before investing in Mutual Funds


Which site is best for mutual fund investment?

Mutual Funds have gained a lot of popularity in recent times. Due to the returns on investment, investors find mutual funds a lucrative option to invest their savings. However, knowing your portfolio and gathering information about it will not only lead you to have better chances of realizing your investment but also, it’ll help you in reaching your savings goals. Most of us who invest through the online portal have a big question – Which site is best for mutual fund investment?

 Well, here at Sqrrl we find the best possible use of your savings with professional aid. We try to maximize the returns on your investment. We will also allow you to fathom the benefits from economies of scale. Investors can buy and sell the mutual fund in large amounts of securities at one time, so in return, the transaction costs associated with it are much lower than what we ensure for an individual.

Also, if you happen to be investing a smaller amount of money, it allows you to gain advantages through a ‘pooled’ approach. Hence mutual Funds are much more beneficial than trading in stocks and bonds.

Let’s brief you on the possible ways through which you can earn money from mutual funds:

Firstly, what are mutual funds?

As per investopedia, a mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Professional managers operate these, and they allocate the fund assets into beneficial schemes to produce capital gains and income for the investors.

Income can be earned through the following ways-

  • Distribution Income – You can earn on mutual funds through the income from various dividends on stocks and interest on bonds. A mutual fund pays out the net profit at year-end to its investors.

  • Capital Gain – As we have heard the term, a capital gain arises when an investor sells their asset on a gain price. Hence mutual funds fetch capital gain on the selling of their securities by the investor.

  • Increase in the fund share price – Mutual funds are subject to market fluctuations. Hence, it makes them more inclined to various risks and rewards. An investor is likely to gain from any increase in the fund price of the mutual fund. It increases in NAV or net asset value. 

At Sqrrl, you not only gain through these advantages but also, gain in terms of professional expertise provided to you during the investment. That’s what makes Sqrrl answer – Which site is best for mutual fund investment?

It differs from its competitors and lets you receive the returns in all the possible forms. We urge you to wisely choose your investment options and ask these questions before investing:

You can start by researching the disclosure documents that a mutual fund company is required to file (by law) with securities regulators. To gain more information about these documents, we advise you to visit the mutual fund company’s website, where you can easily file these documents.

Did you know while most of us think that an advisor can be trusted for advice about investments, there are about 88% investors who get a better return on their investment than they would without an advisor? Interesting isn’t?

Now after researching the disclosure documents, a good rule of thumb urges you to go through the following areas as well before investing:

1. What is the goal of the fund you are investing in?

It is essential to know that the goal of the fund aligns with your overall investment goal. Answer these questions before investing in any fund share:

  • Does it fit the objectives of your portfolio?
  • How long do you have to invest? 
  • What are your personal goals? 
  • Does it provide regular income?
  • Does it work with your other investments? 

If these factors align with your overall mutual fund investment appetite, then you can feel the confidence before investing in the chosen mutual fund scheme.

2. How much risk are you exposed to while investing in the mutual fund?

It is a great saying –  “You can either make or lose money on a mutual fund.” One of the top mutual fund investment sites to invest in, Sqrrl will always provide you the best professional guidance from a Certified Financial Planner professional. It will not only lead to earning higher potential returns but also minimize the risk at the same time.

One of the key roles of a financial advisor is to make sure that the clients are invested in different schemes of mutual fund investment, as per their risk tolerance. So, always discuss your risk appetite with your financial advisor before investing. And carefully choose the fund you are most suitable with.

3. Is studying the past trend and performance of the fund share necessary?

One of the critical considerations before buying a mutual fund scheme is tracking its past record and performance. While knowing how a fund has performed in the past can’t tell you how the fund will play in the future, it can definitely help you in comparing your mutual fund’s performance with other funds in the market. Hence, you should always review the fund performance for more than a year and concentrate on the various market trends it follows when putting under different market conditions.

Sqrrl, which is the best site for mutual fund investment reviews a fund’s performance for more than one year and then shows it to the investor. It also has a dedicated team of professional researchers who frequently monitor the top mutual fund scheme to invest in. That’s how the advice of professionals dedicated to understanding investments can save you the time and hassle of conducting that research yourself.

4. What are the different costs associated with the Mutual Fund?

All mutual funds are associated with various costs on the initiation as well as disposal. As an investor, it is essential to know what are the charges your company is asking you to pay when it comes down to mutual funds. 

  • Entry Load – Entry Load refers to mutual fund charges paid by investors when they enter into a mutual fund scheme for the first time. This is designed to cover the distribution expenses borne by the fund house while promoting a mutual fund scheme.

  • Exit Load – Exit Load is one of the critical charges of a scheme. An investor pays it at the time of redeeming the mutual fund units. This charge is put in place to discourage investors from exiting the scheme. Exit loads are not mandatory for mutual fund investment. However, if a fund house wants to, it can charge an exit load up to the maximum limit of 7%.

  • Expense Ratios – Expense Ratio is expressed as a percentage figure and refers to the annual fee charged by a fund house for the management of a mutual fund scheme. Read more here

5. Who is the person responsible for managing your fund?

The portfolio manager is the person responsible for the success of a mutual fund. So, it becomes imperative to know the individual’s experience and education in the given field. Ask:

  • The investment style of the individual concerned
  • Person’s education and experience
  • What is their success rate?
  • Is the individual changed frequently by fund management?
  • What is the turnover?

6. What are the taxes levied on mutual Funds?

There are various taxes involved when holding a registered plan of the mutual fund. You should always know the tax regulations and the amount of taxes charged before investing. There are some are tax-free investments as well, so you can ask your advisors about those investments, and side by side also learn about the various capital gain taxes levied on a mutual fund. Don’t hesitate to reach out to the professional advisor at any time. At Sqrrl, we’re try to ensure you have the information, advice, and products you need to succeed when it comes to your investment goals.

Investors are given choices to reinvest or receive a cheque. Hence, depending upon the choice you made – either taking the finds on a day to day expenses or putting it in an emergency fund or maybe reinvesting the money, every decision has different tax implications. Therefore, discuss wisely with your investor before investing.

Naturally, your best resource for information about mutual funds is none other than the best site for mutual fund investment – Sqrrl. So, whatever your pay grade may be or your investment horizon, at Sqrrl we will be able to answer all your queries about mutual funds or any other investments. It will create a portfolio as per your requirements. Enquire about the mutual fund before purchasing, find out as much about it as you can.

Click here to download Sqrrl now and start saving and investing.

Written by

Priyanshi Bhardwaj