Mutual fund investing is a long-term attempt and should be connected to your financial goals. There is no exceptional strategy that will fit all types of investors. Instead of the best funds, you should ask about the right funds that are suitable to meet your needs.
Each investor is different, specifically risk appetite and time horizon for the investment may differ.
Now, as first-time investors, the question arises how can we find the right mutual fund for ourselves?
It’s a very simple process, you just need to be aware of two things: -
Priority of your goal
the most important question is understanding your goal and prioritising it. Education expense versus buying a car, which one is more important? Each person may have a different answer but that becomes a defining line.
How far is your goal?
You need to be aware of how far your goal is and how much you need to save monthly to meet the same.
Once you are aware of your financial objective, you pick up a mutual fund in these categories:
1. Less than one year – Investing in liquid debt funds. These funds are low-risk and will conserve your capital and provide moderate growth.
2. Invest for 3-5 years – As you have a slightly longer duration, you can combine debt funds with 25-30% large-cap equity funds. This will help you to grow wealth without taking too much risk.
3. Invest for more than 5 years – Since you can give your investments a lot of time to grow, you should opt for equity funds. Within equity funds, you can choose a combination of equity funds.
Comments