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Understand & Learn

Begin with investments in balanced funds to understand the way mutual fund investing works…

I am 36 and working in the private sector. My current monthly salary is Rs40,000 of which I want to invest Rs15,000 for the next five years. What is the best fund to start with for better returns?
- Simanta Hazarika

Investing regularly and systematically in equity funds is the right approach to wealth creation. While you have decided on a time frame to invest for, it will also be good to have a financial goal that you wish to achieve in these 5 years and the corpus you wish to build.

Since you come across as a new investor, we suggest you start investing through SIPs in a balanced fund such as HDFC Prudence or Reliance Regular Savings Balanced schemes.

After a period of 6 months, you will understand the way investing works and then can work on a portfolio that has core and satellite holdings. The core holdings should comprise of steady funds such as those that fall in the ‘Equity: Large & Mid Cap’ category. You should consider holding a few categories of funds that have the potential for quick growth, but are volatile such as mid- and small-cap funds as well as sector funds. This way, you will have a sound portfolio with overall growth possibilities. You will also be better off reviewing your investments at least once a year.

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