Planning long-term mutual fund investments?

The most frequently asked question in any mutual fund forum is how to choose the best fund scheme. This question will startle anybody since necessary information is not given by most people. In reality, one cannot really tell what horizon for investment or tasks are suitable for investments in case there is a portfolio of the finest smallcap and mid schemes. One should clearly identify his goals and the investment horizon required to choose the best-suited equity mutual fund scheme. In case you have long-term goals and a high penchant for risk and an investment time frame of around 5 or more years, you should select equity based plans. Thereafter, it is crucial to find out whether you are a conservative, moderate, or an aggressive investor.

Suppose you are conservative as an investor and it will be recommended that you invest solely in large cap plans for mutual funds and also in more balanced schemes that are equity based. If you are a moderate investor, only largecap and multicap schemes are suited for you. Again, aggressive investors should settle for midcap and smallcap schemes. They can also add sectoral scheme provided that they have a thorough knowledge about the sectors. Starting without any clue can prove to be dangerous; so it is any day a must to familiarize yourself with the basics.

Also, if you are on the lookout for the best mutual funds to invest in for long term, bear in mind that it is not always necessary to include every five or four star scheme from every possible category. Rather, it is a much wiser idea to choose one or two schemes from the category that agrees with your risk profile. Even great schemes can turn out to be worthless for you if they are not in line with your risk profile. Also, experts are of the opinion that adding too many schemes is not a prudent strategy to reduce risk and maximize profits. On the contrary, it is often very difficult to monitor the performance of each one of them.

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