Things to Know Before Investing in Mutual Fund
Mutual funds are most preferred and well known investment option for the individual investor who wants to get a solid return from stock market, to acquire a handsome amount of money to fulfil a specific plan. Now a day, many people offer suggestion about investing in mutual funds, maybe friends or colleague, maybe someone from family. And a growing trend is realized that more and more people are investing in mutual funds.
But before investing in mutual funds, everyone should know things very well about it and also need to check some things to make a better investment with mutual fund because there is risk associated in it.
Things that everyone should know before investing in mutual funds:
Defining a purpose- The mutual fund investment are normally done to fulfil a purpose e.g. saving for home, retirement, or any personal need that is to be fulfilled in future. Sometimes the purpose can be saving taxes.
Ways of Investment- There are two type of investment available, one is where you put a lump sum amount for investment and another is where there will be a systematic planned investment option which is pretty much traditional DPS but with even a higher return. The second is commonly known as systematic investment plan (SIP) and known as best option as one can invest small amount of money monthly and the payment is not mandatory every month. Which is a relaxed option for many.
Duration- Need to understand the fact that mutual fund investment is always a long term plan. So before investing, everyone should keep it in their mind.
Risk- Most important piece of information of all, mutual fund investment means investing in stock market. And stock market investment is always associated with risk. One should understand the potential risk in mutual fund. Compounding- Good news is even though there is risk but return is also great. Power of compounding holds in mutual fund investment and in some cases investment amount can get double of the initial investment with proper choice of mutual funds.
Compounding- Good news is even though there is risk but return is also great. Power of compounding holds in mutual fund investment and in some cases investment amount can get double of the initial investment with proper choice of mutual funds.
Some checks needed to be done before investment:
Monthly Business Review- January 2019
Bangladesh is now a role model in economic development boosted by its population and growing industrial base led by RMG industry. Economy is growing at more than 7% and projected to grow even faster in the future to become the 26h largest economy in the world by 2030. However, behind this rise lies multiple challenges revolving around infrastructural development and inadequate funds. Bangladesh needs to receive enough funding to sustain this growth and one industry has potential to do just that – Private Equity and Venture Capital (PEVC). Globally, PEVC backed companies are proven to generate more revenue and employment growth than non-PEVC backed companies.
However, for Bangladesh it’s still a distant reality. While the large start-ups of Bangladesh such as bKash and Pathao are gaining FDI and global attention, small start-ups are also on the rise guided by incubators and accelators. Thus, Venture Capital’s popularity is amassing but Private Equity still begs attention. Private Equity is shunned due to prominent obstacle such as, no local institutional investors, an economy reliant on debt financing, an obstinate corporate culture and huge tax rates on fund manager fees. Therefore, regulations and policies require structure and changes to promote local fund manager participation and attract international firms. Thus, a thriving PEVC industry is the catalyst for economy’s development that will unfold Bangladesh’s success through its manufacturing and tech sectors.
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