How to choose the right mutual fund: A two-step guide

Even though mutual funds greatly simplify the task of equity (stock) investing - as you read in the previous chapter - choosing the right mutual fund can be pretty tricky. And especially if it is your first mutual fund. Choosing the first fund can make or break your investment journey because one bad choice may discourage you from investing in the future. But worry not. We are here to help you pick the right mutual fund. The plan Step 1: Select the fund category Don't get stressed by looking at the length of this chapter. We are simply laying down different scenarios for you. All you need to do is see which case study is similar to your situation. Case 1: If you are new to equity and tax-saving is not a goal What we recommend: Aggressive hybrid fund (for long-term wealth creation). What they do: These funds invest majorly in equity and some portion in debt. Why we recommend them: They are suitable for first-time investors, as the debt portion helps cushion the fall a pure equity fund usually witnesses when a market becomes negative. This plays an important p

This article was originally published on December 07, 2021, and last updated on July 21, 2023.