Selecting a Mutual Fund Scheme

Consider a beautiful dress catches your fancy while shopping. It looks gorgeous in the display window.

However, while trying out the outfit you realise that it is ill fitting; the colour does not suit you and is more or less designed for a teenager.

Would you buy this outfit simply because it looks good? The answer would be no.

Similarly, would you invest in any mutual fund simply because it has been performing well? The answer is no again.

A mutual fund investment requires you to think about your:

• Needs
  
• Future goals
  
• Present situation and
  
• Capacity to take risk

We spoke to some investment advisors to find out the right ones for you that are available currently in the investment market.

Single and Working

If you are single, in your 20's, working and without any dependents, then the motive behind investment should be wealth generation from a long term perspective.

That is, to secure your future financially. So if you are looking for long term wealth generation you could opt for equity schemes.

However, the equity schemes invest in the shares of the company which is volatile and has higher risk factor.

As a beginner, however, a balanced fund would be best suited for you as it keeps your investment balanced between equity and fixed return investments. This assures that your risk is minimized and you are not at a loss in case the market fluctuates.

So if you are looking at a long-term investment and are not interested in money being given to you at various intervals, the growth plan is meant for you.

Certified Financial Planner B. Sreenivasan, recommend the top three balanced schemes.

1. HDFC Prudence Fund (G)

Fund Type: Open-Ended. Which means you can sell the scheme at any point.

Investment Plan: Growth 

Minimum Initial Investment: Rs. 5000

One Year Return: 29.1%

2. SBI Magnum Balanced Fund (G)

Fund Type: Open Ended

Investment Plan: Growth

Minimum Initial Investment: Rs. 1000

One Year Return: 22.8 %

3. DSP-ML Balanced Fund (G)

Fund Type: Open Ended

Investment Plan: Growth

Minimum Initial Investment: Rs. 5000

One Year Return: 24.9 %