MF QueryBoard

I have been into mutual fund investments for the past five years. Many of my friends who also started their investment journey with me are now using the guidance of financial advisors. On this note, I wanted to know the benefits of using a financial advisor for mutual funds.  [EasyDNNnews:PaidContentStart]

Entering the world of mutual funds can be exciting yet daunting, Rajesh. A financial advisor can be your trusted partner in this journey, helping you make informed decisions and potentially boost your returns. 

Firstly, a financial advisor personalises your investment strategy. They'll take the time to understand your financial goals, like planning for retirement or your child's education. They'll also assess your risk tolerance - how comfortable you are with potential market ups and downs. This ensures your mutual fund portfolio aligns perfectly with your needs and risk appetite. 

Secondly, financial advisors bring expertise and knowledge to the table. They stay updated on market trends, analyze various mutual funds, and recommend those with a strong track record and promising potential. They go beyond just returns and delve into the fund's investment philosophy, the companies it invests in, and the management style. This ensures the chosen funds truly fit your goals. 

Thirdly, financial advisors provide ongoing support and monitoring. They'll regularly review your portfolio's performance, and recommend adjustments based on market changes and your evolving goals. They can also help rebalance your portfolio to maintain the desired asset allocation over time. This ensures your investments stay on track and weather market fluctuations. 

There are additional benefits to consider. Financial advisors can suggest tax-efficient strategies to maximise your returns. If you're planning for retirement, they can help choose suitable mutual funds to build a secure future. 

While there are fees associated with financial advisors, the potential benefits like increased returns, reduced risk, and peace of mind can outweigh the cost. Remember to discuss fees upfront and ensure the advisor aligns with your needs. With a financial advisor by your side, you can navigate the world of mutual funds with more confidence and work towards achieving your financial goals. 

I have my mutual fund investment spread across multiple schemes. Even though I can get daily updates on these investments on my phone, I would like to know - How can I track the performance of my mutual funds? - Rahul Sharma 

Keeping a watchful eye on your mutual fund's performance is essential, Kavita. It ensures your investments stay on track to meet your financial objectives. 

Here are several methods you can use to effectively track your mutual funds:
■ The first line of defence is your account statements and portfolio reviews. Most fund houses and investment platforms provide regular account statements detailing your holdings, current NAV (Net Asset Value) per unit, and overall portfolio value. By monitoring changes in NAV over time, you can gauge how your funds are performing. Additionally, many platforms offer online access to your portfolio, allowing you to view real-time NAV, investment units held, and overall portfolio performance at your convenience.
■ Investment platform tools can be another valuable resource. Most platforms offer built-in performance tracking tools that allow you to monitor the performance of individual funds and your entire portfolio over various periods. You can compare your funds' performance against relevant benchmarks like stock market indices to see how they stack up. Some platforms even allow you to set up alerts and notifications for specific performance thresholds, keeping you informed of significant changes in your fund's value or NAV.
■ Here are some additional tips to remember: When tracking performance, always compare your mutual funds to relevant benchmarks. Equity funds can be compared to a stock market index like Nifty 50 or Sensex, while Debt Funds can be compared to a fixed-income index. It's important to focus on the long-term performance of your funds and their alignment with your investment goals, rather than obsessing over daily fluctuations in NAV. Emotional decisions can be detrimental, so avoid panic selling during short-term market dips. Stick to your investment plan and consider seeking professional advice if needed. 

By employing a combination of these methods, Kavita, you can effectively track the performance of your mutual funds and make informed investment decisions to achieve your financial goals.

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