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How Often Should You Review Your Mutual Funds Investment

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05 Aug 2023

Introduction 

  • Mutual funds are one of the best investment options. From wealth-building to diversification, mutual funds are well-suited for all purposes. However, merely investing is not enough; it is crucial to review and monitor your mutual fund investments as well. 
  • How often should you review your investment? This article sheds light on the optimal frequency of reviewing your mutual funds and much more.

Why Should You Monitor Your Mutual Fund? 

A mutual fund is an investment where several investors pool their money and invest in different sectors. The profit generated from this investment is distributed equally among the investors. The two major reasons to monitor or review your mutual fund investments are: 

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  • The financial market is dynamic and prone to fluctuations. Therefore, by monitoring your investments, you can stay updated on the current market trends and potential risks. 
  • Reviewing your mutual funds allows you to evaluate the fund's expenses, fees, and cost-effectiveness. Fund expenses can impact your investment returns, so a review is essential to ensure that you're receiving value for your expenses.

How to Evaluate Mutual Fund Performance? 

Some ways in which you can monitor the performance of your mutual fund are:

  • Evaluate the performance of the mutual fund by analyzing the performance of the benchmark. You should compare other similar funds to track their performance. 
  • Evaluate the fund's expense ratio, which represents the costs associated with managing the fund. 
  • Analyze the fact sheets, annual reports, and prospectus of the fund. 

How Often Should You Review Your Mutual Fund Investment? 

The answer to this question depends on various factors. Although there is no one-size-fits-all solution, here are some general guidelines to consider:

  • You should regularly monitor your funds. This can involve reviewing your portfolio every three to six months and Staying regularly informed about the funds' performance. 
  • In addition to regular monitoring, it's important to conduct a thorough review of your mutual funds at least once a year. This annual review provides an opportunity to assess your portfolio's performance, evaluate your investment objectives, and consider any changes in your financial situation.

Conclusion 

  • Monitoring and analyzing the performance of your mutual fund is a necessary part of your investment journey.
  • By staying proactive and regularly reviewing your portfolio, you can make confident decisions and increase your chances of achieving long-term financial success. 

 

Related Blogs: What is a Holding Period | How To Choose High-Return Mutual Funds For Your Portfolio | What are Growth Mutual Funds | Exploring Contra Funds & Contrarian Investing Strategy

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