4. Fees, charges and net return on mutual funds

Mutual fund houses charge a fee on the investments in return of services it provide. The fees are classified in two types like exit load and expense ratio. Mutual funds charge an exit load on investments which are redeemed before a stipulated timeframe.

Before investing in mutual funds, investors should know the time frame till which exit load is charged. This time frame should be less than the time frame of goal for which the investment is being made. Expense ratio is the recurring fee charged by asset management companies for managing the investments. The expense ratio varies from 0.5 per cent to 2.5 per cent based on the nature of the fund and investment style.

5. Know your fund manager

It is very important as an investor to know the fund manager as well. One can do so by analyzing the performance of funds managed by him, especially during periods when markets went through difficult times. Fund managers are like captains of the ship, like a captain controls the fate of the passengers on the ship the same way the fund managers control investors financial journey. Therefore, it is important to review the manager's tenure and the performance of the fund since they've been the "captain" of the portfolio.