Mutual funds for a young investor to invest for a long term

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My name is Divine A Mathew, from Kerala, India. I am a 23-year-old, looking to start investing. Can you suggest some funds that perform good in the long run (28-30 years) and also some short term benefit funds?

–Divine A Mathew

Rushabh Desai, an Amfi-registered mutual fund distributor, based out of Mumbai, responds:

It is good that you are looking to start investing very early on in your life. The time horizon of 28 to 30 years will allow you to take high risks in the equity segment and will help your investments compound at an exponential rate. Looking at your age and your long-term horizon, I suggest you the following funds – Kotak Flexicap Fund, Mirae Asset Focused Fund, Invesco India Contra Fund, Axis Midcap Fund, SBI Small Cap Fund and Motilal Oswal S&P 500 Index Fund. You can invest in these funds in equal proportions. The combination of domestic and international (US) exposure across various market capitalizations will give your portfolio ample diversification to grow in different market cycles. It is important to see these funds as a basket but if you are unable to invest in all of them and don’t understand the market dynamics then you can simply start investing in the Motilal Oswal Nifty 500 Index Fund.

For your short term needs you can look at high credit quality debt funds like HDFC Ultra Short Duration Fund with a minimum time horizon of 3 to 6 months and IDFC Low Duration Fund with a minimum time horizon of 6 to 12 months. You can also look at investing in short-term bank fixed deposits. As you are young you may not understand all the dynamics of the markets and thus, I would urge you to make your investments under the watch of a knowledgeable advisor / distributor which will help you to avoid mistakes and mishaps during the course of your investment period.

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