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Mutual Funds for Long-Term Investment

In simple words, a mutual fund is a sort of financial vehicle that pools money from several participants to invest in securities such as stocks, bonds, money market instruments, and other assets.

When it comes to long-term investment, people often opt for mutual funds. Why? Mutual funds tend to "deliver the goods" over the long term.

One of the major qualities of a mutual fund is that it has a diversified portfolio, which in the long run eliminates the disturbance caused by the volatility of the market.

Mutual funds are classified into numerous types based on the securities they invest in, their investment objectives, and the sort of returns they seek.

Long-term goals have a time horizon of more than five year or ten years, and equity-oriented schemes are among the greatest long-term investment options.

Equities have a better potential for growth than hybrid and debt funds while being more volatile in the short term.

While choosing the mutual funds for long term investment, here are a couple of pointers that you need to take note of:

  • Consider equity mutual funds that have a strong track record of at least 5 years and have been among the top performers in their respective categories.
  • The schemes should be diversified across investment styles and fund management.
  • Ensure that each equity mutual fund selected scheme abides with its stated objectives, indicated asset allocation, and investment style.
  • Each equity mutual fund scheme that is to be included in the portfolio should have seen an outperformance over at least three market cycles.

You can also take the Systematic Investment Plan (SIP) route. This is to mitigate the volatility and benefit from the power of compounding.

For more details, check out the best mutual fund schemes to invest in India.


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