How to Choose the Best Mutual Fund

Choosing a mutual fund is not easy, especially for beginners of mutual fund investors. My Finance Team will present it to you on how to choose the best mutual fund and match your profile. Happy reading and investing properly!

Investment is believed to be a tool that can be used to gain financial freedom, such as mutual fund investments. For you, beginners of this investment may have difficulty in choosing the type of mutual fund, where investment in mutual funds will benefit you and also safe from the side of legal legality.

The good news for you beginners, investment in the form of mutual funds is basically so simple. Here are some ways you need to understand in investing mutual funds.

# 1 Understand Your Investment Profile and Purpose

The first principle in investing that is a common understanding is high-risk high return, where profits are largely in line with the big risks you have to bear. If you want a high profit, of course, you need to prepare your mind and guts for high risk as well. Among them is the value of investments that can slide drastically. If you have great guts, it is not wrong if you try to invest in shares.

Conversely, those who are not less brave in taking big risks, usually choose money market funds or fixed income mutual funds. Of course, you can not expect big levels of profits.

# 2 Determine the Timeframe and Type of the Appropriate Mutual Fund

If you already know your profile, you need to determine the investment period, the number of years and how long your money will be invested in the mutual fund. This time period will be related to the selection of mutual fund types, including money market mutual funds, fixed income mutual funds, balanced mutual funds or equity funds.

For 1-2 years investment, you are advised to take investment in the money market mutual fund, because it will be more secure and calm. This type of investment is recommended for those of you who include a conservative profile in investing.

For investments between 2-4 years, you can try a fixed income mutual fund. If you want to invest for your child's tuition or college goals, this option is right for you.

For investment between 4-6 years, you can feel the security if investing in mixed mutual funds. This investment can be used while you are planning to buy a home.

For investments in 6 years, you can choose equity funds. This investment can be used if you are preparing for your retirement and long-term interests.


Always recognize your risk profile and investment objectives before making a choice. Next, analyze the characteristics of the mutual fund product you want and note any information you get on the explanation sheet called Fund Fact Sheet which contains a full explanation of mutual fund products. Fund Fact Sheet can be obtained online at the investment manager website of the mutual fund issuer you want. If it is not available, you can ask that the investment management company send it to you.



# 3 Choose an Investment Manager and Get to Know the Investment Product

Investment Manager or commonly called MI is the institution that will take care of every money we invest. Choose MI who has a good track record and trusted. You can see the list of MI on portalreksadana.com site. Choose 10 MI with the highest Asset Under Management (AUM). In choosing the age of the product investment, you can choose products that are old enough, usually 5 years because within 5 years of economic fluctuations so that the product will be tested with the best conditions and worst. Your product age can be observed through the prospectus or Fund Fact Sheet from each mutual fund or you can see the NAV price (Net Asset Value) of at least $0,5 / unit.

In the investment world, trust is a very important element. Make sure your money is managed by an MI company that has credibility, financial fundamentals and a good name in the investment world. Companies that manage large public funds, certainly get high trust from the community.

One of the things you should not miss is information about a number of funds under management of a mutual fund product that can make you more calm to invest. If the fund under management is large, then the product is good and not easily faltered when facing the condition, where there is a lot of investor funds.



# 4 Choose MI that Serves Customer Well

One of the rights of investors is to receive the best service from MI companies. Characteristics of companies that provide the best services include:

The sales agent is friendly and able to explain any information you need.

Fast, but cautious and thorough service because Investors usually have to fill out a number of forms according to standard rules.

Provide periodic reports on investor fund developments to be mailed to investor's address every month.
The administration process is easy when making a purchase or a sale. Consult this procedure with a sales agent before making a product purchase.

Have a support website that is always updated and contains complete information. A good website shows the company's good faith to openly and transparently share information with the public, especially its investors.


# 5 Compare Mutual Fund Costs

In investing mutual funds, of course, there are administrative costs that you must bear as an investor, including:

Subscription fee, ie fees charged when purchasing a mutual fund product, including when adding a top-up investment.

Redemption fee, which is the cost incurred when the investor wants to withdraw funds (make a sale). The amount of this fee varies, but there are also MI who do not charge sales for investments that have been planted over a year.

The management fee is the cost charged by the MI company.