Points to remember for direct mutual fund investments

Mutual fund is nothing but a combined pool of money that is invested by many people. It results in long term profits.

An investment is usually made by any person through an agency, distributor or online portal. Even though this method has been followed for long, it leads to deduction in commission from the amount that one is investing, and only the balance is invested in mutual fund. The amount deducted may seem insignificant when compared to the invested amount, but its burden can only be well understood if seen over the long run as the sum multiplies.

To avoid this scenario, the Government has passed new guidelines enabling an investor to invest without paying commission. An investor can investing directly in Direct Mutual Funds and thus save the charges of commission.

The point to remember here is that this saving is directly proportional to the commission. The funds where the commission charged is higher, the benefits of direct investment will also be greater. One can also get more benefits from direct investment with high starting investment amount.

Before investing in any Direct Mutual Fund, the various factors to analyse the benefits of different funds are:

1.       Investment amount.

2.       Investment period.

3.       Risk to Return ratio.

4.       Lock-in Period

5.       Liquidity of assets.

To sum up, remember to diligently review the performance of the fund, its ratings, liquidity, the risks and returns involved, lock in period and its suitability to your reasons for investment before investing in any mutual fund, directly or otherwise.