Like any purchase decision, your selection of an investment product should be based on your expectations and the funds ability to fulfill these goals. It is important to be clear about your investment objective before you enter into a buying decision. Understanding your goals will give you the basis for developing your investment or financial plan. If you are planning to build a Mutual Fund portfolio, the first step is to examine your current situation, which can be done through investor profiling.
Ask yourself questions like:
Why Am I investing in a mutual fund?
What kind of returns do I expect?
What portion of my net worth would I like to set aside for investments?
What do I intend to use the gains for? How many years do I have?
What is my investment objective? – Capital Appreciation or Preservation etc.