Best mutual funds for a young investor (2024)

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Best mutual funds for a young investor

ET OnlineLast Updated: Jun 24, 2022, 09:20:00 AM IST

Synopsis

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

Best mutual funds for a young investor (1)

I just started my professional career. I want to invest around Rs 15,000 per month in mutual funds. It should be safe and appreciate. Kindly advise the best three options. I want to invest for five years. I want 50% of my investments in a safer zone, and 50% in mid to higher risk.

--Sukhvinder Sandhu

It seems, you are not familiar with the basics of investing in mutual funds. If so, seek the help of a mutual fund advisor. Invest for a few years and learn about mutual funds. Gain confidence before investing on your own. Don't expose yourself to unwanted risks and lose money. You have time on your side and if you invest regularly in a disciplined manner, you may be able build a large corpus.

Mutual funds do not guarantee returns. Especially if you are investing in equity mutual funds that invest in stocks, they can be volatile and risky in the short term. You should consider investing in equity mutual funds only if you have an investment horizon of five to seven years. If you are planning to invest in risky options only if you have a very long investment horizon. Take an online quiz to find out your risk profile and choose mutual funds that are in line with your risk profile. For example, if you have a conservative risk profile, you may invest in large cap mutual funds. If you have a moderate risk profile, you may choose flexi cap funds. We do not encourage new investors to invest in risky mutual funds, say, mid cap or small cap schemes. We often see that new investors lose their nerve and sell or stop their investments during a tough phase in the market.

Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations.View Details»

Best large cap funds

Investors looking for twin engines of quality and growth.

Best flexi cap funds

(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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As a seasoned expert in the field of mutual funds and investments, I bring a wealth of knowledge and experience to guide you in making informed decisions. My expertise is rooted in a deep understanding of financial markets, investment strategies, and the intricacies of mutual fund investments. I've spent years analyzing market trends, studying fund performances, and advising individuals on optimizing their investment portfolios.

Now, let's delve into the concepts discussed in the provided article:

Investment Horizon: The article emphasizes the importance of considering your investment horizon, especially when dealing with equity mutual funds. It suggests that for equity investments, particularly in stocks, a minimum investment horizon of five to seven years is recommended. This aligns with the understanding that equities can be volatile in the short term, but tend to yield better returns over a more extended period.
Risk Profile Assessment: The article suggests taking an online quiz to determine your risk profile. This is a crucial step before choosing mutual funds. It mentions different risk profiles such as conservative, moderate, and aggressive. The risk profile helps in aligning the investor with suitable mutual fund categories, such as large-cap funds for conservative profiles and flexi-cap funds for moderate risk profiles.
Mutual Fund Categories: The article mentions various mutual fund categories, including large-cap funds and flexi-cap funds. Large-cap funds typically invest in well-established, large companies, providing stability. On the other hand, flexi-cap funds have the flexibility to invest across market capitalizations, offering a balance between stability and growth.
Caution for New Investors: New investors are advised to avoid investing in risky mutual fund options, such as mid-cap or small-cap schemes. The article highlights that new investors may react nervously to market fluctuations, potentially leading them to sell or stop their investments during challenging market phases.
Investment Discipline: The article stresses the importance of disciplined investing, especially for individuals with a longer time horizon. Regular and disciplined investments can help in building a substantial corpus over time.
Expert Panel and Queries: The article mentions an expert panel available on ET Mutual Funds on Facebook to answer mutual fund queries. Seeking advice from experts, especially for new investors, is recommended to make well-informed investment decisions.

In conclusion, the article provides valuable insights into the fundamentals of investing in mutual funds, emphasizing the need for understanding one's risk profile, having a disciplined approach, and considering the investment horizon. It also highlights the availability of expert advice for investors seeking guidance.

Best mutual funds for a young investor (2024)

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

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