Traditionally, Indians have preferred investments that offer a fixed return and safety of their capital. However, mutual funds have emerged as one of the popular investment avenues due to the potential capital appreciation over the long term that has the potential to exceed the returns from fixed income instruments. The Indian Mutual Fund industry has recorded Rs 31.42 lakh crore AUM, 9.79 crore folios, and 3.73 crore active SIP accounts as per AMFI data released on Mar 31, 2021. Investing in fixed deposits may not significantly grow investor’s income over the long term. For those looking to build wealth over the long term with market risk can consider investing in equity mutual funds.
Before setting out to choose the best mutual fund to invest in, Investors need to firstly determine their financial goals and their investment horizon and most importantly their risk-bearing capacity. Age, income, financial commitments all add up to your risk capacity. Based on these parameters, investors can then go on to shortlisting the best mutual funds to invest that meet their requirements.