How to select best mutual funds for your portfolio

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A mutual fund is an investment instrument, that pools money from the investors and invests in stocks, bonds, securities, and other money market instruments. If you are planning to start an investment or already investing in various tools then adding mutual funds to your investment portfolio is a good option.

Choosing the right mutual fund is an important step in achieving your financial goal.

On Money9 Helpline, CFP Poonam Rungta helped our viewers understand why mutual funds are a great investment tool.

Edited excerpts

Manoj Rastogi: I am 32 year old. I want to invest Rs 4000 per month for 10 years. Please suggest one best mid-cap fund, I can take risk

Rungta: Yes, a midcap fund is very suitable for you, You can choose between Axis midcap fund, DSV midcap fund Kotak emerging fund. All three are good mid-cap funds. You can also choose two separate funds for better diversification. You should invest diligently for the long term that is 10 years as this category is very volatile. Even if the markets are down you should still hold your investment in these funds. With disciplined investing, you will be able to achieve your goals and gain very good returns.

K Subramaniam: In the current interest scenario which debt fund is suitable for investing for three year period?

Rungta: If you have three years, then instead of completely investing in debt you can take some risk and also invest in balanced funds. With the current scenario in the debt fund market, you can invest in short-term funds. Once the debt cycle improves we can take the call.