No Risk Fund

I have Rs 3 lakh which I would like to invest in a good mutual fund for a year. I am looking for a fund that protects my principal. Which fund do you suggest?
- Amit Mitra

If you do not want to take any risk on the principal that you plan to invest; mutual funds are not the investment products for you. Mutual funds are exposed to both market risks and interest rate risks depending on the kind of funds you consider and do not guarantee capital protection. For your investment time frame you could consider investing in a bank fixed deposit as it will give you the guarantee of safety that you require along with assured returns.

This article was originally published on February 09, 2011.