One of the common asked question to me is "where to invest in Mutual funds". Out of thousands of schemes, really, it's difficult to list out good funds, which will perform well in coming years.
So, today, I'm writing an article on that.
We all know there are different types of mutual funds – equity diversified, balanced fund, liquid fund, Monthly Income Plan , Tax Saving Funds etc. I'm taking top funds from each category to help every investor.
While selecting funds, I've taken many factors in mind like past performance of fund, objective of fund, AUM, expense ratio, age of the fund, consistent return, standard deviation, Beta, portfolio of fund, AMC reputation etc.
Equity Diversified Mutual Funds
The best way to create wealth either for yourself, or for your child's education or marriage or your own retirement planning, just invest in these funds. Suitable for long-term investors i.e. more than 5 years of time. You can invest lump-sum and/or invest via SIP mode also. Don't see NAV on daily basis and don't stop your investment if market is down. These schemes invest around 80%- 100% in stock market.
|Reliance Regular Savings Fund – Equity|
|HDFC Top 200|
|DSP BlackRock Small & Mid cap Fund|
|IDFC Premier Equity Fund|
|ICICI Prudential Discovery Fund|
|HDFC Equity Fund|
|Reliance Growth Fund|
If your time horizon is less than 3-5 years, you can invest in Balanced Funds as they invest around 60% in equity & balance 40% in debt.
|Reliance Regular Savings Fund – Balanced|
|SBI Balanced Fund|
|HDFC Prudence Fund|
These are Monthly Income Plans. They offer monthly income in the form of dividend. But remember, it's not mandatory that company will give dividend every month. Since about 20% of money will be invested in equity, it's possible that company fails to give dividend in case stock market is down like in 2008. So, if you're looking for regular monthly income, without any break, forget these mutual funds, & go for Post office MIS. Although in long term, these plans can give better returns than post office MIS.
|HDFC MIP LTP|
Equity Linked Savings Scheme also invest upto 100% in equity like equity diversified fund. The only difference is that it has a lock-in period of 3 years. So, you get tax-advantage of Sec80C by investing in these schemes as per the current tax rules.
|Birla Sunlife Tax Relief 96|
|SBI Magnum Tax Gain|
|HDFC Tax Saver|
|HDFC Long Term Advantage Fund|
All of the above mentioned funds various options like Growth, Dividend-reinvest, dividend payout etc. If you're a long-term investor and your objective is to create wealth for yourself or for child's education or marriage or simply for retirement purpose, just go with Growth option.
If you've got any doubt, please feel free to ask that under comments section below.
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October 13, 2010