In this particular episode of “When to review mutual funds” we have discussed reasons any investor should keep in mind, perform regular checks and review their investments. This will keep their financial goals on track. Mutual funds are an investment product that allows individuals to pool their money together to invest in a diversified portfolio of securities, such as stocks, bonds, and other assets. While mutual funds can be a convenient and relatively low-cost way to invest in the stock market, it is also important to review your mutual fund investments periodically.
Myths about mutual fundsThere is a myth mutual funds should be monitored for its expense ratio and switch to low cost alternatives. But that is not true, Mutual funds charge management fee or expense ratio to conduct its business and provide share to its distributors. Whether you take the service as a financial advisory or a mutual fund distribution you pay for their service duly either in terms of advisory fee or a distribution commission. Both would anyways come to an equated proportion. I would only tell you that you check whether service they give protects your wealth and compounds to your expectation. There is also a misconception once a money is put into some fund or a plan it would take care of itself. Not so every time. You have to get into a discussion with the service provider and seek inputs and take appropriate actions. Some of the reasons why you need to review your mutual funds are given below.
Reasons to review Mutual Funds
- Investment performance: The performance of a mutual fund can change over time due to market conditions or changes in the fund’s management. Regularly reviewing your mutual fund investments can help you assess whether they are still meeting your investment objectives and if any changes need to be made.
- Portfolio diversification: Mutual funds can provide diversification across a range of securities, but it is still important to ensure that your overall investment portfolio is diversified across different asset classes, sectors, and geographic regions. Reviewing your mutual fund investments can help you assess whether your overall portfolio is properly diversified.
- Changes in personal circumstances: Your personal circumstances, such as changes in income, risk tolerance, or investment goals, may change over time. Reviewing your mutual fund investments can help you ensure that your investments align with your current circumstances and investment objectives.