Mutual Funds Portfolio Building

Mutual funds in India are so much professionally managed, highly regulated by SEBI and cost effective (Entry & Exit loads are 0%) that you don’t need to invest in any financial products except Term Insurance & PPF to do effective financial planning. Virtually all the varieties of mutual funds are available in the market such as equity, debt, gold, gilt, Index…etc..

Many financially unaware Indians invest in insurance cum investment products like ULIPs , money back policies, whole life insurance plans and child future plans or retirement plans thinking that they will fulfill their two needs – Insurance & Investment. But well, Term Insurance + Mutual Funds + PPF is most cost effective and powerful financial combination that no insurance cum investment product can beat.

Mutual funds have 0% entry load and 0% exit load after 365 days and just 1.5 % annual fund management charge which is reasonable while insurance cum investment products charge you anywhere between 20-100% premium allocation charge and lots of exit/withdrawal charges and long lock-in periods. So avoid these combined financial products. Invest in mutual funds via SIP regularly for long term and build enormous wealth for your retirement and for your child’s future.

Principles of Mutual Funds Investing.

• Never invest in NFOs
• Invest in 3-4 Equity Diversified mutual funds
• Don't be collector of mutual funds. Never collect more than 4 equity mutual funds, 2 debt funds and 1 ELSS.
• Invest via SIP
• Avoid Sector/thematic funds.
• 1-2 Debt funds are enough
• 1 ELSS (Equity Linked Saving Scheme) is enough.
• Invest in mutual funds having past record of proven performance of at least 5 years.
• Invest more in largecap funds if you want stable portfolio
• Invest more in mid & small cap funds if you want aggression in your portfolio.