Ways to select performing mutual funds

The moment we have a headache, mild fever and cold we run towards our medical kit at home and pick out a medicine that we think will help.If the medical condition prevails till the next day, we run to our next door pharmacist seeking advice or call up a cousin to get the advice on which medicine to take. Only when the situation goes out of control, we run to a doctor. The above mentioned scenario is very similar to how we handle our investment decisions. When it comes to our investment decisions, we always trust our colleague or friend over an experienced financial advisor. Every patient requires intervention from doctor, diagnosis of the problem and a treatment specific to the patient’s problem. The same process must be followed in financial investments as well. Very much like a family health doctor ,there should be family finance doctor (a financial advisor) who understands the financial needs and works with the family to help them achieve their financial goals. When such advisors help you in constructing the investment portfolio, it is strongly advisable not to believe in hearsay or recommendations from a non-competent person be it family or friends. It would be wrong to identify one fund or a set a funds as best performing funds and investing in them. One single fund is not a solution to all our problems. Choosing a mutual fund to invest is an outcome of need analysis, risk profiling, defined financial goals etc. This is a partnered post.