Probably you have seen an ad about mutual funds either in newspaper, on television or in other printed mass media boosting the promotion of the mutual funds, in fact with the promise that your invesment will grow...and grow...and grow. Is it true that invesment in mutual funds always profitable? It would be better for us to take a look at the following important tips on mutual funds before deciding to give our money to the investment manager who manages the mutual funds.

1. No Profit Guarantee.

Except for the money market mutual funds, other types of mutual funds are open to the risk of decrease in the investment value due to the change in the market prices, and however advanced an investment manager is, it would be impossible for him to avoid this kind of risk. If there is a mutual funds investment offering fixed profit from the investment of shares and bonds, it is nothing more than just a lie ! It is because only money market instruments (deposits, SBI) which guarantee fixed capital and return rate.

2. Past Performances Not Guarantee For the Future

This statement always occurs in every mutual funds prospectus. It seldom happens that a mutual fund which record an excellent achievement over a particular period of time can repeat the same achievement in the next period. It means the above statement is true.

3. Investment is Your Cooperation With Investment Manager

Do not immediately blame your investment manager for merely short-term performances. An investment manager will not be able to show good achievement if you do not cooperate with him for long term and give him opportunity to show his achievement.

4. Realistic.

Your investment manager is not a magician who will always produce money for you. Their performances greatly depend on the market condition where they invest as it is stipulated in the prospectus. So, be realistic, because they surely will not be able to give you profit when the market falls to 20%.

5. Mutual Funds Prospectus .

Before deciding to invest in mutual funds, it would be better for you to read the prospectus first and notice the following items:

• Investment Purpose. Pay attention to the purpose and policy of the investment. Make sure that the investment purpose and policy match the investment criteria you expect.

• BiayaFees. Make sure that you do not pay too much fees for the investment services. Especially for selling fees, because selling fees are the fees paid to the sales agent of mutual funds that will not produce any proceeds for your money.

• Risks. Pay attention to the risks which affect the performances of the mutual funds.

(R)