I am 27 and want to start investing in mutual funds. Please suggest the best fund that I can invest in and how to build a good portfolio and if SIP is a good option. I am planning to invest Rs 2,000 to Rs 3,000 every month for the next 4-5 years?- Javed
Investing regularly and systematically in equity mutual funds is the right way to achieve long term wealth creation. As you are new to investing you should start SIP investments in balanced funds such as HDFC Prudence or HDFC Balanced to experience mutual fund investing for the next six months to understand how SIP investments work and follow the progress made by your investments.
Once you have experience mutual fund investing, you can start building a portfolio by adopting the core and satellite philosophy and invest in large-cap funds such as Franklin India Bluechip or ICICI Prudential Focused Bluechip Equity and large- and mid-cap funds such as or HDFC Top 200 or UTI Dividend Yield fund which should account for up to 80 per cent of your investments with the satellite comprising mid- and small-cap, multi cap and other funds to provide complete diversification. By investing regularly and systematically through SIPs, you do away with the gamble of timing the market and average out your investment. And lastly, remember to invest regularly and assess the progress made by your investments.
This article was originally published on August 17, 2011.
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