ve not invested in mutual funds but would like to start now. After reading about various funds, I have narrowed down my choice to HDFC Balanced, HDFC Midcap Opportunities, and Reliance Small Cap and plan to start SIPs in them. However, I’m worried because their NAV is rather high. I’d like to invest for about three years. Please tell me if I’m on the right path.
-Vishal Sharma
It’s great that you have decided to invest in mutual funds and have taken the trouble to learn about them. Of the three funds you have chosen, HDFC Balanced is a good choice. The other two, although suitable in a different context, are not advisable for a beginner with a three year horizon.
Here’s another article on this website that specifically discusses what one’s first funds should be: Choosing Your First Fund.
As for your doubt about high NAV, it’s a complete non-issue. The NAV of a mutual fund is relevant only as a comparison to its own past. It’s actual level does not matter. This is nicely explained in this article in the Learning section of our website: Is Low NAV Cheap? This article also has a good explanation: NAV Be Damned!
This article was originally published on December 02, 2014.
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