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How To Choose Your Mutual Fund Portfolio?

Mr. C.S. Sudheer | Updated On Tuesday, April 24,2018, 10:58 AM
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How To Choose Your Mutual Fund Portfolio?

 

You and other citizens love to invest in mutual funds. Mutual funds especially equity mutual funds, have given very high returns and a number of citizens are investing in them. Just take a look at the highly successful Mutual Funds Sahi Hai Campaign and its innovative themes?

If you have been following this campaign, you would have seen these themes, A plan for every goal, Money doesn't get locked up, it gets invested and Diversify risk, for potential rewards.

Now, you are facing a problem. There are several mutual funds and you don't know which ones to invest. If you have already invested in mutual funds, you're not sure if they are the right ones for you? Simply speaking....You don't know how to choose a mutual fund portfolio....

Want to know more on mutual funds and which mutual funds are sahi hai are you? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.

 

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How To Choose Your Mutual Fund Portfolio?

 

Before investing in mutual funds make this decision. Are you an aggressive investor willing to take risks for higher returns OR are you conservative and don't like taking risks. You have to invest in mutual funds based on your risk appetite, time horizon and financial goals.

 

Choose mutual fund portfolio based on risk appetite

 

1. Wealth Maximiser Portfolio

 

If you are young, aggressive and like to take risks, you must invest in equity mutual funds. You must opt for the Wealth Maximiser Portfolio. Wealth Portfolio has two mid-cap funds, one small-cap fund and one multi-cap fund. Wealth maximiser could have 96% equity and around 4% debt. Equity could be 44% large cap, 17% small cap and 39% mid-cap.

Remember: Though some mid-cap and small cap funds have given great returns in the past year, they are extremely risky. Many small cap and mid-cap funds have even stopped accepting new investments and allow only SIP investments.

 

SEE ALSO: Mutual Fund Investment In Minor Child's Name

 

2. Wealth Builder Portfolio

 

Are you the slow and steady kind who prefers to invest in mutual funds which have some risk, but give decent returns? Wealth Builder which invests in stable large cap stocks is just right for you.

A portfolio of large-cap equity funds gives decent returns to a long term investor. Wealth builder could have 95% invested in equity and 5% invested in debt. Equity could be 74% large cap, 5% small cap and 21% mid-cap.

Remember: If you are a cautiously aggressive investor look to invest in a wealth builder portfolio.

 

3. Stable Wealth Portfolio

 

If you are the kind who wants reasonable growth but with not too much risk, opt for the stable wealth portfolio. Stable wealth is a balanced mix of equity and debt. A stable wealth fund has 3 equity-oriented balanced funds, one ELSS fund and one short-term debt fund.

Balanced funds invest in both debt and equity. When stock markets do well, the equity portion gives good returns. When stock markets crash, the debt portion cushions your investment. Stable wealth builder could have 60% invested in equity and 40% invested in debt. Equity could be 65% large cap, 10% small cap and 25% mid-cap.

Remember: A balanced fund may have 40% invested in debt, but enjoys the tax benefits of equity.

 

SEE ALSO: How To Choose The Best Mutual Fund?

 

4. Wealth Secure Portfolio

 

You don't like investing in stocks? Try the Wealth Secure Portfolio which has 3 short term debt funds, one debt oriented hybrid fund and an ELSS scheme. Wealth Secure has an equity exposure of just 24% and 76% in debt. Equity could be 44% large cap, 7% small cap and 49% mid-cap.

Remember: Wealth secure invests in short term debt funds which are safer than long term debt.

 

5. Income Generator Portfolio

 

If you are a retiree (person retired from employment), look to invest in an income generator portfolio. You have to make a lumpsum investment and then withdraw monthly. Income Generator invests in two medium-term income funds, two short term debt funds and one debt-oriented hybrid fund.

So why invest in Income Generator Portfolio? Fixed deposit rates are coming down. An investment in debt funds, gives higher returns than FD.

Remember: Debt funds enjoy a tax advantage over fixed deposits.

ELSS is an excellent way to invest in equities. ELSS has a 3 year lock-in, which makes sure you stay invested in equity for the long term. ELSS enjoys the EEE benefit where the amount invested is tax deductible up to Rs 1.5 Lakhs a year under Section 80C. Your returns and the amount withdrawn at maturity are tax free. Be Wise, Get Rich.

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Article Author

Mr. C.S. Sudheer

Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.

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