Am I investing in the right mutual funds?

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I am 29 years old and investing for a long term. I started investing in mutual funds one month ago. I have started investing in three mutual funds :

Will start investing in other funds. Am I going in the right direction?

— Saurav Jain

Harshad Chetanwala, Co-Founder of MyWealthGrowth, a financial planning firm, based out of Mumbai responds:

The idea of investing in equities for the long-term is absolutely right. Also, the funds you are investing in are good from an overall investment perspective, you can continue to invest in these funds in future as well. As you have recently started your investment in mutual funds, I would like to share some suggestions that can help you build the right portfolio for yourself in future.

Avoid over diversification in your portfolio. Right now you have three funds and as you gain more confidence you will soon add more. Try to keep six to eight funds in your equity funds portfolio. More than that might create over diversification which does not help. At the same time try to create a right blend of large cap and mid cap in your portfolio, where large caps can be the anchor of your portfolio with maximum allocation and some allocation in mid and small cap companies. You can try to add SIPs or increase SIP amount whenever you get an opportunity. Since you are young and the more time you give to these investments it will work for you.

Equity investments are volatile by nature. You should avoid knee jerk reactions like stopping SIPs or redeeming from funds when markets are not doing well. In fact, use such opportunities to add more units in your portfolio if you have money during such times.Try to review your funds once or twice in a year to keep a check on the progress.

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