How to select a low-risk fund for investing a lump sum?

Let's say you want to invest a certain amount of money in mutual funds but are not ready to take a heavy risk. If you're looking for a low-risk fund, then instead of looking out for a particular mutual fund scheme, it is important to zero down on the right category or the type of mutual fund. There are several categories meant to suit the different needs of investors. If you're looking at investing for the short term, that is, if you require this money within the next five years, then don't look beyond a fixed-income fund. There are several categories in the debt-fund space. If you have a horizon of at least one to one-and-half years, you can go for a high-quality short duration fund. These funds invest in bonds and are a suitable investment avenue for your short-term goals. But do remember while debt funds are low-risk in comparison to an equity fund, they still carry a bit of risk. Check out the risks associated with debt funds.

This article was originally published on July 06, 2022.