In which mutual funds should I invest Rs 3 lakh to get an annual return of at least 12 per cent?
Deepali Grover
Mutual funds are not assured return products and they do not guarantee any specific or fixed return. This means that there is no mutual fund product, which will definitely and in a predetermined time frame deliver a certain return.
The general guideline is that the pursuit of higher returns will entail higher risk. Equity funds sit on the higher end of the risk ladder whereas debt funds are towards the bottom. If you are looking for a regular monthly return then Monthly Income Plans (MIPs) could be one of your options. MIPs invest a small portion of their corpus (upto a maximum of 15 per cent) into equities while the remaining is invested in debt instruments. The quantum of return will, however, vary month by month. In the worst case, the fund may not pay you anything for a certain month. But over the long-term, you may achieve your target of 12 per cent annual return.
Mutual funds do not offer assured returns and carry market risk. Unlike bank deposits, your investment in a mutual fund can fall in value. This should be kept in mind before making any investments in mutual funds.
This article was originally published on December 03, 2002.
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