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Beginner's Mission

For a novice, balanced funds should start the investment cycle

I want to invest some money in mutual funds in a one time investment, while I also want to put money consistently in other funds. Which are the mutual funds that I should opt for?

If you are investing for the long term, then for a new investor like you, the advise would be to go for a good balanced fund. But investing a huge amount in any fund as a lump sum should be avoided. If you want to invest say a lakh of rupees, or two, in funds, then you should distribute it and invest it in the coming three-four months. 

Select one, or two, good balanced funds like DSPBR Balanced Fund, UTI Balanced Fund or Magnum Balanced Fund. Invest over three-four months after distributing the amount and thereafter invest in it consistently. It is necessary that the investment should be for a period stretching over years. 

Through this type of investment, you would get growth in a stable way. If there is a major fall in the markets, then the impact on these kinds of funds is less as 30-35 per cent is invested in fixed income instruments. For an initial investor, this is a very good option.

I have undertaken an insurance policy from AVIVA that carries a Rs 30,000 per annum premium. I wanted to know the details regarding this.

Whatever it is, it is a certainty that it is a ULIP. You would get insurance coverage in this. And a part is invested. In a way you are investing in a mutual fund whose other component is insurance. 

It is a bit difficult to segregate both of them. Every ULIP’s structure in the opening year causes a lesser amount of money to go for investment and after the second year, the larger amount of your money goes in for investment. If you invest it for a short term period, then it would be bad for you. However, investing in a ULIP is not a good option if you are only looking at it from an investment point of view. 

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