How to Select Mutual Funds

Introduction to Mutual Funds

Over the past few years, investors are showing great interest in mutual fund investments. Not only High Net Worth individuals but even young working professionals are service class individuals nearing the retirement age are looking to invest in Mutual Funds to grow their hard-earned money.

Through investing in the mutual funds is associated with a lot of risks but at they also offer high returns that can create solid wealth creation for an individual investor.

Before looking at what all mutual funds to invest in, one needs to know different types of mutual funds.

Types of Mutual Funds

Through investing in mutual fund, you will be associated with a lot of risk factors but at the same time they offer a lot of returns that will give you a substantial rise:

  • Debt Mutual Funds- The debt mutual funds are low on risk and bring stability to the investment portfolio. The interest is however taxable. This is ideally suited for investors who have 0 risk appetite and essentially looking at preservation of capital. This is ideal for pensioners or investors who are only financial objective is preservation of capital
  • Equity Mutual Funds- The Equity mutual funds are a high-risk product. As the name suggests, the amount invested in Equity Mutual Fund is in turn invested in stock market. Performance of the stock market and performance of the fund are essentially 2 factors that determine returns on these funds. Since a lot of risks is associated with the equity funds, they also give returns that are high. So the underlying principle “Higher the risk, Higher the return” holds true for Equity Mutual Funds. Also, Equity Mutual Funds are tax free after 1 year. This is ideal for young professionals who have a longer time horizon and greater risk appetite.
  • Hybrid Funds- These kind of mutual funds is those that are often associated with the combination of both the debt as well as equity mutual funds. An important thing to note here is if the Equity Component is over 65% then the returns from these Hybrid Funds is tax free and if the Equity Component is under 65% then they are classified as Debt funds (For income tax purposes) and returns are taxable. Historically they are known to give returns of 12%-15%.
  • Liquid Mutual Funds- They are classified under debt Mutual Funds-These mutual funds ensure returns that are slightly higher Fixed Deposit. These funds are very high on liquidity and best suited if an investor wants to invest a large corpus for a short duration. For eg, a few crores invested for say 30-45 days. Ideally suited for corporates who have a substantial corpus that is idle for a few days.

Mutual Fund Advisor Mutualfundwala Shares Top-Performing Funds

With the coming of 2018, there are a lot of top performing mutual funds that are offering the great advantage to the customers. There are lot more mutual fund advisor in India but MutualFundWala is one of India’s best mutual fund advisor in India that will suggest some of the great mutual funds that you should invest in.

risk appetite in mutual funds