An easy-to-browse ready reckoner for everyone, with lots of easy tips
SIMPLE STEPS TO BUILD YOUR MUTUAL FUND PORTFOLIO
1. Even with a large investment corpus, there should be just enough mutual funds (MFs) to get adequate diversification to reach your long-term goals. 2. Invest in a mix of MFs that has little correlation to each other as this ensures that even if one or two MFs face rough times, others may perform well enough to protect your portfolio. 3. Start by picking one large-growth fund and one large-value fund, both in the large-cap space, to give you exposure to growth stocks and also to more value-oriented stocks. 4. Next, pick either one fund that focuses on mid- and small-cap stocks (it can be growth, value, or blend), or two funds - one mid-cap and one small-cap - in contrasting styles (small-growth and mid-value). 5. Pick one decent fund that invests primarily in developed countries if an "international" flavour interests you. 6. Lastly, choose a diversified (dynamic) bond fund if you want to have an allocation to fixed income securities. 7. These 5-6 funds are sufficient for the perfect mutual fund portfolio. 8. There is no need to keep real estate funds, gold funds, China funds, or sector funds as there are no solid reasons for such additional exposure to achieve long-term goals. 9. Invest in them through monthly Systematic Investment Plans (SIPs), monitor your portfolio half-yearly to ensure overall performance, and do an asset re-balancing yearly. 10. If this exercise seems difficult, your goals can still be easily reached by investing the entire corpus through monthly SIPs in 1-2 Balanced equity funds of different fund houses, as they do all this automatically and without building up any tax liability, besides riding market upheavals.
2. Invest in a mix of MFs that has little correlation to each other as this ensures that even if one or two MFs face rough times, others may perform well enough to protect your portfolio.
3. Start by picking one large-growth fund and one large-value fund, both in the large-cap space, to give you exposure to growth stocks and also to more value-oriented stocks.
4. Next, pick either one fund that focuses on mid- and small-cap stocks (it can be growth, value, or blend), or two funds - one mid-cap and one small-cap - in contrasting styles (small-growth and mid-value).
5. Pick one decent fund that invests primarily in developed countries if an "international" flavour interests you.
6. Lastly, choose a diversified (dynamic) bond fund if you want to have an allocation to fixed income securities.
7. These 5-6 funds are sufficient for the perfect mutual fund portfolio.
8. There is no need to keep real estate funds, gold funds, China funds, or sector funds as there are no solid reasons for such additional exposure to achieve long-term goals.
9. Invest in them through monthly Systematic Investment Plans (SIPs), monitor your portfolio half-yearly to ensure overall performance, and do an asset re-balancing yearly.
10. If this exercise seems difficult, your goals can still be easily reached by investing the entire corpus through monthly SIPs in 1-2 Balanced equity funds of different fund houses, as they do all this automatically and without building up any tax liability, besides riding market upheavals.