How to start a mutual fund journey in your 30s?

Read on if you have just turned 30 and want to know the best mutual funds to invest in

12-Sep-2022

Best mutual funds for 30 year olds

I want to start SIPs at the age of 30. Which mutual funds will be best for SIPs? I am considering investing Rs 5,000/month. Thanks - Mohinish Jagdale

Congratulations on taking one of the best decisions of your life.

As we always emphasise, it's never too late to start investing.

But kya SIP sahi hai? Absolutely. It's a no-brainer.

Identify the purpose

If you want to save tax and build wealth in the long run
In this case, equity-linked savings scheme (ELSS) would be the best option. Investing in ELSS allows you to deduct up to Rs 1.5 lakh from your taxable income under Section 80C of the Income Tax Act.

And if your financial goals are five years away, ELSS would be a perfect investment avenue.

ELSS are pure equity mutual funds and invest across companies of different sizes and sectors, which is why they have the potential to deliver inflation-beating returns.

But do note that they have a three-year lock-in, which means you can't exit the investment before three years.

If you want to meet your financial goals
If you don't need any tax benefits or you have already exhausted your Rs 1.5 lakh 80C limit, then you can look at investing in an aggressive hybrid fund. Aggressive hybrid funds typically allocate 65 to 80 per cent in equities and the rest in fixed income.

Debt, as an asset class, is not dependent on stock market performance and is not volatile. Therefore, a great advantage of these funds is that they control the equity volatility to some extent. They gain well when the markets go up, and fall less sharply when the markets crumble. Aggressive hybrid funds are therefore suitable for first-time investors.

Wondering which tax-saving or aggressive hybrid fund to choose? Check out Value Research Premium. It will give you access to the list of mutual fund schemes hand-picked by our analysts.

In conclusion
You can start your SIPs in these two options. But once you get comfortable after investing for about two to three years and understand how equities behave, you can switch to a pure equity fund such as flexi-cap funds for your long-term goals. These funds are similar to equity-linked savings schemes (ELSS) but do not provide any tax benefit, and therefore, do not have any lock-in period.

Happy investing!

Suggested read: Your first equity investment