Mutual funds are accompanied by a risk of loss of capital because they are linked to the fluctuations in the stock market. It is best to invest if you have ample knowledge about stock market or when you are in consultation with a certified financial advisor. With knowledge of the nature of stock market, you can gauge when will the market be in a declining stage or a growing stage. It is best to sell your mutual fund investment when the market is at a peak. As a result, you will receive a good NAV (net asset value) of the units owned by you.