–Sima Devi
We always ask investors to invest in mutual funds that are in line with their goals, investment horizon, and risk tolerance. You are committing the mistake of choosing a mutual fund based on its past performance without paying attention to whether it suits your goal and risk profile.
Small cap schemes are typically recommended to aggressive investors who can take a lot of risk and stomach a lot of volatility. They should also have a very long Investment horizon of at least seven to 10 years. Do you meet the requirement? If yes, you can go ahead and start investing.
Ideally, you should start with identifying your goals. Next, how much time you have to achieve them. Finally, how much risk can you take? If you are investing for your short-term goals, you should invest in debt mutual funds. However, you need to choose schemes based on your investment horizon and risk profile. For example, if you are parking your money for a few days or weeks, you should invest in liquid funds. Are you investing for three years? You can choose corporate bond funds, banking & PSU funds, short duration funds, among others. If you are investing for a long-term goal of at least five to seven years, you can invest in equity mutual funds. However, you need to choose schemes based on your risk profile. For example, if you are a conservative equity investor, you should consider investing in large cap mutual funds. If you are a moderate investor, you may invest in flexi cap funds. If you have an aggressive hybrid funds, you can invest in mid cap, small cap, thematic schemes, and so on.
If you are not sure about the basics of investing in mutual funds, you should seek the help of a mutual fund advisor. Gain experience and knowledge before taking care of your investments on your own.
Some useful links
Best large cap funds
Best Flexi cap funds
Best mid cap funds
Best small cap funds
Best mutual funds to invest in 2023
