Are these mutual funds good for long-term investment?

If you have any mutual fund queries, message ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

I have started investing in mutual funds from this month. I am investing Rs 5,000. I have an aggressive risk appetite. I have no short-term goals, I want to invest for a long term. I have allocated Rs 5,000 to these three mutual funds:

Mirae Asset Emerging Bluechip Fund: Rs 2,000
Parag Parikh Long Term Equity Fund: Rs 2,000
Axis Small Cap Fund: Rs 1,000

Are these funds good? I am planning to increase my investment every year by 10-15%.
- Chandel Nayan

You are currently investing in a large & mid cap scheme, multi cap scheme, and small cap schemes. Though you have stated that your risk appetite is aggressive, since you are a new investor you should find out your risk profile by taking an online quiz. Many new investors feel very adventurous and optimist when they start investing. However, they realise the real nature of risk and volatility only when the markets gets into a prolonged bear phase or when their investments lose value sharply. That is why it is important to assess your risk profile and build a portfolio that is in line with your risk profile.

  • 13.54%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 4.9 YearsTime taken to double money
  • 10.01%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.10 YearsTime taken to double money
We do not recommend high risk categories like mid cap and small cap schemes to new investors. We believe they should stick to relatively safer options like large cap and multi cap schemes in the beginning. They should invest for a while in these schemes and gain confidence before taking extra risk.

Since you are investing a modest amount, you do not need to add too many schemes in your portfolio. You just need a good multi cap scheme like Parag Parikh Long Term Equity Fund in your portfolio. As said earlier, keep investing and learn about mutual funds for a year or two before adding risky categories to your portfolio.

Seek the help of a mutual fund advisor if you are keen to add risky options. You may need personalised advice during times of crisis to continue with your investments. It is extremely important to continue with your investments if you want to create wealth over a long period.

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