Best types of mutual funds for newcomers

Being an amateur, it is not expected out of you to pick out one best mutual fund plan that offers the best returns and requires low investment.


Being an amateur, it is not expected out of you to pick out one best mutual fund plan that offers the best returns and requires low investment. In this initial phase, you must already be panicking about the investment amount and what happens if you don’t make any good returns. So, to make your work easy, we have combined some of the best mutual fund plans in one place. Here they are:

  1. Equity Schemes: Equity investment is the most popular mutual fund because they let investors participate in stock markets while having a potential for high returns in the long run. They also have higher risks but that is bound to be the case if they also offer higher returns. For beginners, these are the best type of mutual funds because they build the portfolio which will offer greater returns in the long run. For the primary earning stage, elss is the best platform to invest. One should know how to invest in elss so that the risk factor can be reduced because equity schemes invest funds over a diverse range of sectors to minimise losses from one large investment. This is called distribution of risk. They can be sector-specific, tax-saving or index funds.
  1. Liquid Funds: If you are someone who wants short-term investment returns, then this is the one for you. Liquid funds are specifically designed to give the investors returns over a short period, unlike other investments. As a beginner, you might want to consider investing in liquid funds because of a low risk appetite since you are still in the initial stages of investment. Some might say liquid funds work as an alternative to a savings account.
  1. Debt Mutual Funds: In these kinds of funds, most of the amount in fixed income instruments such as government securities, debentures, bonds, etc. They are also known as fixed coupon bearing instruments. The purpose is to generate a fixed income so it is best for those investors who want a steady flow of money and have a low-risk appetite. However, the returns on these investments are not very high either.
  1. Balanced Funds: If you are unable to choose between Debt Funds and Equity Funds, then Balanced Funds are for you. As the name suggests, the investor will get the best of both worlds because balanced funds invest your money both in debt funds and equity funds. The allotment is not stagnant as it is based solely on market risks prevailing at each time. For those who have a low risk-appetite and are comfortable with moderate returns as compared to other funds, then balanced funds are the answer to their question.

These are some of the most famous and secure investment options in mutual funds. However, the best mutual fund is the one that suits your needs the most and not what is popular in today’s time. So always keep an eye out for a scheme that suits your investment, return and risk-appetite the best.

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