Choosing Mutual Funds in India With Financial Goals In Mind

Investments should never be random. A knowledgeable investor will always define their goals first before planning their investments.

Common financial goals include retirement plans, buying a house/property, children’s education or marriage, health insurance, even traveling.

Defining these goals, along with understanding if they are short-term or long-term, can help us systematically direct our money to investment instruments. Allocating a fund to a particular goal is a common attitude. One’s risk appetite can also come into play here.

So what are the metrics to check? The selection of mutual funds in India depends on factors such as the investor’s risk appetite, age, risk-to-reward analysis, goal, and duration.

For example, if the investor is young, the risk appetite can be considered to be high and the goals can be set for the long term. Hence small-cap funds or value-investing funds can be selected.

If the investor is aged, the risk appetite can be considered low and the goals will be short-term. Hence asset allocation and balanced funds can be selected.

Otherwise, is there any other way to invest? Simply No.

Hearsay is a rookie mistake. Looking at just fads and popular investment purchase trends is also a mistake, mainly because they will have no performance history.

So is past performance alone a reliable point? Again no.

Selecting good quality mutual funds is essential to fulfilling your financial goals. And as discussed in the article above, it is important we learn the many fundamental parameters that regulate the workings of a fund. Only that can ensure smart and successful investment.

Investing though Mutual funds in India. What matters for consistent growth?

Here are a few concepts to consider:

Growth spikes vs. consistency

The mutual funds shows growth spikes in periods of bull runs and rallies of the stock market. A certain sector can have a steep bull run for a few months, but what matters most is how consistently the mutual fund is beating the benchmark over the long run

Factors that affect growth

The macro-economic factors like interest rate regime, industrial production, supply-demand equilibrium, FII intervention affects the growth of the mutual funds in India. These factors have an impact on the economy of the nation on the whole.

DISCLAIMER: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Brokerage will not exceed the SEBI prescribed limit.