Those who have recently bagged their first job are probably still navigating the financial universe in all its forms. You are now exposed to the realities of living a life: paying bills, maintaining a household, making savings, setting money aside for emergencies, etc. However, this is the perfect time for you to divert a part of your monthly income towards investments aimed at creating wealth for the future.
We recommend the following 5 mutual funds in India to get you started:
The ELSS (Equity Linked Savings Fund) is a fund that invests heavily in equities, and has a short lock-in period of just three years. It shows a good potential for growth on your investment owing to its exposure to equities. You can garner good capital appreciation on this fund, and choose to stay invested for a longer period for better returns as well. Plus, it offers good mutual fund tax benefit up to Rs 1.5 lakh per year.
2) Balanced Funds:
As the name suggests, this mutual fund investment finds a balance between equities and debt, to offer a good mix of growth and stability. As a new investor who is careful about investing too heavily in the markets, it is prudent to have a few balanced funds in your portfolio – they offer you the option of choosing a more conservative outlook over a moderate one, depending on your goals and investment appetite.
3) Index Funds:
As the name suggests, these mutual funds in India invest in an ‘index’ and buy stocks in the same proportion as the index they are tracking. Thus, they mimic the performance of the index and track it constantly. As a new investor, you would do well to check on index funds and have a couple of them in your portfolio, provided you do your research about the market and sector that the index fund is tracking. Generally, upcoming sectors and established businesses are good ones to hedge your bets on.
The Exchange Traded Fund (ETF) is a bundle of stocks or bonds grouped by category, such as currencies, stocks, commodity futures, etc. The value of the ETF mutual fund investment is mapped by the cumulative value of all the asset classes included in it. This mutual fund grows in a collective rather than individual performance basis. You also get dividend pay-outs periodically. Try and look into gold ETFs, an emerging mutual fund in India.
5) Gilt Funds:
These are considered as stable and ‘safe’ funds, owing to their exposure to gilts, or Government securities. They exhibit stable and good growth over a long period of time. Some of the top funds in this category of mutual funds in India have shown annualised returns of 16% since inception.