Whenever you want to invest, your first step should be to outline an investment objective. This helps you shortlist the investment instruments best suited for achieving your objective. Mutual funds are pure investment products, and there are thousands of them in the marketplace, suited to every kind of investment objective.
Here are a few persuasions for first-time investors.
- Long-term growth with high safety
Debt mutual funds and gilt mutual funds may be your best option if you want slow, steady growth over the long term.
- Long-term growth with moderate risk
Pick a large-cap fund. These invest 80% and more in large-cap companies, which tend to be stabler compared to their mid and small-cap counterparts.
- Long-term growth with aggressive risks
Small-cap, mid-cap, micro-cap and diversified mutual funds may be the way to go for the adventurous investor ready to take big risks. The long-term returns from these fund categories top all other categories.
- Combining risk and safety
Hybrid funds help you invest in a diversified mix of equity and debt options.
- Index funds mimicking the market indices
Index funds are passively-managed funds. They mimic market indices such as Sensex and Nifty, without the active involvement of a fund manager.
- ELSS for tax savings
Equity-Linked Saving Schemes (ELSS) offer tax deductions under Section 80C of the Income Tax Act.
- Undecided & just want to keep the money safe
Liquid funds are your option. These funds invest in short-term money market instruments with a maturity period under 91 days.