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Mutual fund investments are the best investment for people who do not want to risk their hard earned money in the equity market directly. People who do not have time to track the equity market and also those who do not understand how the equity market works, invest in various mutual funds.

There are methods to get maximum returns from the mutual fund investments. This is usually not followed and people are passive as far as mutual funds are concerned. Many people think that the mutual fund is the responsibility of the fund manager and do not do anything active as far as mutual fund investments are concerned.

The tips to maximize the returns from mutual fund investments are:

1. Start investment fund with a single fund: When you start investing in mutual funds, try to start off with a single fund. Once you understand how a mutual fund works, then you can diversify into more funds. This is because the more funds the individual invests in at the beginning, the more loss he will encounter if things go wrong. This will help to get maximum returns from mutual fund investments.

2. Diversify into 2-3 core funds: Once the investor understands the intricate details and the method of working of the mutual funds, the investor can diversify and start to hold more than one fund. Initially the investor should have a right mix of funds so that the three core funds are balanced between high returns and low risk. This will help the investor to gain much and also stem the loss if anything goes wrong. These funds can be either large cap and mid cap stocks. Investing in such funds can help to get maximum returns from mutual fund investments.

3. Balanced funds: The mutual fund should be a balanced fund where the money has been invested in many different markets like the equity market, commodity market and also the money market. Some of the money could be invested in government bonds to decrease the risk of capital loss. This will help the investor to have adequate return on the investment. It will also help to keep the capital safe.

4. Keep money at hand: As with any investment, there should be some funds in hand. This will help the investor to invest at a lower price and wait for the fortune to change and there will be more return on investment. This will help to maximize the return on investment. It will also help in case there is an urgent need for money. Keeping cash in hand will be useful at those times instead of taking money out of a mutual fund.

5. Follow no others: The market never follows the crowd. The market usually rises when people predict it will fall and vice versa. So it is not good to follow the methods of the crowd. The investors should do their own research for investing. Also trying to time the market to invest will never work as the turn around in a market movement can be very swift leaving the investor high and dry. Avoiding these mistakes can help the investor to get maximum returns from mutual fund investments.

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About Author / Additional Info: I am a physiotherapist and also a freelance writer. I have been writing for many blogs and websites and also take up freelance assignments. Comments are welcome at prakashdavid@rediffmail.com

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