January 25, 2021

Types of Mutual funds in India

2 min read
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How to invest in mutual funds is like planning a journey we have to study the routes and stops along our way and make a decision about our final destination, similarly investing in mutual funds for the betterment of one’s future a person needs to have such clarity. For such clarity, we have to keep in mind some points such as:-

  1. Properly defined goals 

To reach your goal and as a mutual fund investor, you must know that what is your financial needs and the amount you to save and invest, or we can say that whether you are going to make short term or long-term investment. For example – if you need to buy a new car, latest device or planning a vacation you will invest in the short term and if you are planning for your child education or your retirement, you will invest in the long term.

  1. Choose a category for mutual fund:

You must choose a time – period that suits your needs. There are many categories according to the need of different mutual fund investor. Investor at first must know about the risks, their financial position and benefits of investment before investing.

The mutual funds list and their anticipated returns are provided here –

                           Types of Mutual funds in India
Fund Type Ideal Duration Expected Returns
Short term funds 1-3 years 8-10%
Income funds 1-3 years 8-10%
Death oriented balanced fund 2-3 years 7.5-12%
Equity-oriented balanced fund 2 – 3 years 10-15%
E l s s funds 3 years (minimum) 15-20%
Large cap funds 4 + years 12-18%
Mid Cap funds 6 + years 15-20%
Small cap funds 7+ years 15-20%
Multi cap funds 1 years Plus 15-20%
Sector funds 7 + years Variable
  1. Methods of investing:

When you have taken your decision of which mutual fund to choose to make sure to look upon the various options that are there to invest.

There are two ways to invest in mutual fund in India:

  1. Lump-sum

It is a type of investment in which a single amount of money is invested in one go. In this investment, a person invests the money in one time for an indefinite period.

  1. Systematic Investment Plan (SIP)

It is a type of investment in which a fixed amount of investment is done in a mutual fund regularly. That amount will automatically get deducted, once you start the biller.

  1. Choosing a type of mutual fund:

After choosing the method of investing, one must select a type of mutual fund for investing. A person has to choose one or more funds to invest in order to diversify their portfolio. Before selecting any mutual funds, make sure to go through their ratings and reviews.

Most of the investor looking for a combination of schemes to make a mutual fund diversification. They choose small, large and medium to fund. A diversified portfolio can mitigate the risk of loss in one sector. When you select the scheme, the most significant thing to notice is to select a scheme that matches your risk profile.

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