We always ask investors to choose mutual funds based on their goals, investment horizon and risk profile. If you want to park the money for a short period, you should choose a debt mutual fund. However, you should further narrow down your choices based on your horizon and risk profile. For example, if you are investing for a few weeks or months, you may invest in liquid schemes. If you are investing for a year or so, you can invest in ultra short term schemes. If you are investing for three years or more, you may invest in banking & PSU schemes, corporate bond funds, etc. You should remember that debt mutual funds may become volatile and risky in a rising interest rate scenario. The RBI is likely to raise interest rates again and that may have an adverse effect on these schemes.
If you are investing for five to seven years, you may consider investing in equity mutual funds. You have to choose the mutual funds from a category that matches your risk profile and investment horizon. For example, if you are a conservative investor looking to invest for five years or more, you may invest in large cap schemes. If you have a moderate risk profile, you may invest in flexi cap mutual funds. If you are an aggressive investor, you may choose to invest in risk options like mid cap schemes, small cap schemes, sector schemes, etc.
If you don’t know the basics of investing or mutual funds, you should take the help of a mutual fund advisor.
Here are our recommended schemes:
Best mutual funds to invest in 2022