PGolla ~ Need best suitable Mutual Funds to invest large amounts

Hello Pankaj , Good afternoon. I really got impressed the prompt responses by you to each and every individual. Appreciate for your service. I can say I'm an illiterate when comes to mutual funds. I did couple of lacks in fixed deposits but never tried investing on any mutual funds. Can you please educate me in quicker way or let me know where can i get basics of these if there is an easy way to learn on these. Now i want to invest couple of lacks ( may be around 10 lacks) , what is your suggestion on what i should invest and also in future if i want to invest more on a periodic basis or one time investments (since I'm an NRI). Hopefully I'm planning to comeback to India for good by end of next year, so i might need tax saving schemes then, but not now, so please advice all at your convenience. Feel free to send me either to my personal email-id (**[email protected]**) or reply to this posting. Everybody talking about STP, FMP, equity's etc... I'm completely new to all these terminology....please help me out and suggest me the best funds where i can invest. All along I just invested on some 401K plan with the help of our own company's advisors which is what my experience.

Thanks in Advance! PG

asked Jul 09 '11 at 00:56 by PGolla 1111

There are different types of mutual funds available in market, that helps you diversify your portfolio in different asset classes.

You should invest in mutual funds based on your age, risk appetite, future goals and requirements.

When you are young, you have invest for a longer period and hence equity based mutual funds are a better choice. But when you need to spend on house/car/higher education/child education/children marriage in some years from now, you will have to keep your savings spare in some less riskier investments.

Following are some of the classifications of mutual funds:
1. Liquid Mutual funds: Substitute of savings bank account. Will generate better returns than savings account. No entry or exit load. Money can be invested even for a day. Best for less than 3 months investments. Amount can be withdrawn anytime, there is no lock-in.
2. Fixed maturity plans (FMP): Substitute for bank fixed deposits. Better taxation than FD. Amount gets locked in for period of investment. Duration ranges from 3 months to 3 years.
3. Monthly Income plans (MIP): Mixed of Debt based investments with some equity portion. Good for people who need regular incomes ideally after retirement.
4. Diversified Equity mutual funds (Large cap, Multi cap, Mid cap and small cap): Pure equity based investment. They invest into stock market. Riskier than all other investments but can generate good returns for a longer period (>3 years). Large cap is less riskier than mid and small caps. Small cap is riskiest.
5. Sectoral mutual funds (Banking, Power, Infrastructure): They only invest into stocks of a particular sector. Like a banking mutual fund will only invest into bank stocks. They are riskier than diversified mutual funds.
6. Balanced mutual funds: They invest into a mix of equity and debt instruments. Around 60-70% is invested into equities and rest in debt/short term funds.
7. Exchange traded funds (ETF) (Sensex, Nifty, Nasdaq, Gold etc.): These are best form of investment as fund management charges are lowest. They can be traded like stocks on stock market. If you don't have time to track stock market, but want to directly invest in best stocks, these are the best bets. Nifty ETF invests into top 50 stocks (which make NIFTY index), similarly NASDAQ ETF invests into US Tech companies which makes NASDAQ index.

Let us know your further queries. For each such query, you can create separate question on this website. It will also help others with similar questions.

answered Jul 09 '11 at 16:36 by Pankaj Batra 5.2k320

Thanks for your kind response on educating me on all above. Can you please suggest with your experience if i want invest 10 to 20 lacks considering my age as 37 years and i have only 2 years baby. Also provide if i want to invest more in near future what could be best either mutual funds or anything else. Also let me know which mutual funds and durations are best suitable for my case. Thanks in Advnace! PG
(Sep 26 '11 at 01:15) PGolla
It won't be good to recommend without knowing your short (less than 5 years) and long (15-20 years) term future goals and your risk appetite. According to your age and dependent kid, I would advise you to start with a portfolio mix of equity and debt based funds in 70:30 ratio as age is on your side. If you want to invest lump sum of 10-20 lacs, its better that you invest it into a debt or liquid mutual fund and start a systematic transfer plan (STP) to diversified equity mutual funds.
(Sep 26 '11 at 17:07) Pankaj Batra

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Asked: Jul 09 '11 at 00:56

Seen: 4,691 times

Last updated: Sep 26 '11 at 17:07