2. Choose funds according to tenure

Why do we make investments, any idea? Most of the investors fail to ask themselves this question. We make investments to ensure that our savings enhance our ability to reach our goals. The investment that we make should match with the tenure of the goal. If suppose you have a short tenure, then picking debt funds is a good option and if you have medium tenure, then balance funds which have exposure to both debt and equity are a good option. Last but not the least Long term investors can opt for more exposure to equity.

3. Look out for the risk associated with the investment

If its investment then risk and return are their integral parts. By balancing these factors individuals can maximize their returns by taking calculated risks. In order to do so, it is important that the individuals analyze their risk tolerance. Risk tolerance is nothing but the willingness of the individual to accept the price swings of investment. Ideally, the risk tolerance or risk appetite of the individual should match with the risk-return tradeoff of the mutual fund. Even diversification is the best option that will help them arrive at a suitable risk-return tradeoff. Thus based on the past performance of the fund, investors can measure the mean return and risk associated with it.