Large-cap or midcap or smallcap: How to invest in mutual funds

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Mutual funds investment is one of the most popular instruments to beat inflation over the period of investment. As per the tax and investment experts, there are various mutual fund segments in which one should decide investing on the basis of one’s investment goal, time horizon, risk taking ability and resource position. They said that for portfolio management, if someone keeps the above-mentioned factors in mind, for such investors’ mutual fund calculator will give better numbers else it may not be able to help the investor meet its investment goal.

Speaking on the road map for mutual fund investment Harsh Roongta, Head at Fee Only Investment Advisers said, “While starting a mutual fund investment plan, one needs to know one’s investment goal, time-horizon, risk appetite and resource position. Once the investment goal and resource position is know, then one will be able to know its time-horizon. Suppose, an investor can invest 5,000 per month and its goal is 1 crore, then it’s for sure that the time-horizon will be long-term.” Roongta said that sometimes, investment tool is decided on the basis of time-horizon too. For example, higher studies or marriage of child, it has a time-horizon and one can invest on the basis of that investment goal.

On how to choose mutual fund tool after being known to the time-horizon Mumbai-based tax and investment expert Balwant Jain said, “One should start investing in mutual funds from index funds as it gives return at par with the market performance. But, if the time-horizon is higher than five years but less than 10 years, then one can go for Large & Mid-cap fund.” Jain said that if the time-horizon is more than 10 years, then one can choose mid-cap or small-cap funds, depending upon its risk appetite. If the risk-appetite is high then small-cap fund is advisable while in the case of low risk taking ability, mid-cap stocks are advised for the investor.

Asked about the major mutual fund plans for an investor on the basis of time-horizon Jain said that for Large & Mid-cap Fund one can invest in Mirae Asset Emerging Equity Fund (Direct Growth). He said that for mid-cap mutual fund investment one can look at DSP Mid-cap Fund (Direct Growth) while for small-cap investment Axis Small Cap Fund Direct Growth can be a better option.

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