Mutual funds are an investment solution for investors of all age groups. Anyone can invest in mutual funds according to their investment needs.

People invest in mutual funds for the purpose of building wealth, achieving life goals like retirement, kids’ college education, vacations, building a house, etc.

Some invest in mutual funds to diversify their portfolio and because of the variety of choices this product offers.

However, the important question remains how to choose mutual funds to achieve investment goals?

Vaibhav Agrawal, SVP Research, Angel One Limited decodes the process on how investors can consider choosing the right mutual funds for their goals:

Before starting an investment journey in mutual funds, one should know their financial objective. This is an important aspect of preparing an investment plan.

Start by identifying goals at different life stages, then decide how much to invest, where, and for how long.

Once you know this, you need to select mutual funds that help achieve these goals. Similarly, you need to identify risk appetite.

Not everyone can take the same kind of risk when it comes to investing. In addition, an investor must also consider the investment horizon, i.e. the time you have to achieve a financial goal.

Other factors should also be considered, such as system ratings, fund manager, taxation, etc.

If you are an experienced investor and have it all figured out, here are the top performing mutual funds for January that can help you reap profits depending on your goal:

Canara Robeco Bluechip Equity Growth – Large Cap Fund

Large cap funds invest in blue chip companies. These funds help investors build long-term wealth with relatively lower volatility compared to other equity funds.

Canara Robeco is a large cap fund, suitable for those wishing to invest for the longer term. It can give returns above the rate of inflation.

Parag Parikh Flexi Cap Growth – Flexi Cap

Parag Parikh is a Flexi cap fund, suitable for investors looking to invest in different sizes of companies through a single fund.

In addition, the Parag Parikh Flexi Cap program also gives exposure to foreign stocks. Approximately 30.35% of the Parag Parikh Flexi Cap Fund portfolio is invested in foreign equities.

It is also suitable if you are investing for five years or more. In the Flexi-cap fund, the fund management team has complete freedom to invest in companies of different sizes.

Kotak Emerging EquityGrowth – Mid Cap

Investors who are comfortable with higher volatility and have a long-term investment horizon can invest in mid-cap funds because they can offer higher returns over longer periods.

Kotak Emerging Equity is the best fund in the segment. If you plan to invest for more than seven years, this fund may give the expected gains. It is a fund that invests in medium-sized companies.

ICICI Pru Equity & Debt Growth – Balanced/Hybrid

Balanced funds invest in both stocks and debt securities. These funds are best suited for beginners who are unaccustomed to stock market volatility.

Investing in debt securities limits downside risk for a lower return than pure equity funds. ICICI Pru Equity & Debt is a balanced fund, suitable for conservative equity investors or novice equity investors who are not used to ups and downs.

HDFC S/T Debt Growth – Debt

Investors looking to invest in short- to medium-term debt securities can invest in debt funds, which offer better tax-adjusted returns compared to term deposits. HDFC S/T Debt is a suitable option for those who want to invest for one to three years and are looking for alternatives to bank deposits. It has lower risk and lower expense ratio.

In summary, mutual funds offer a variety of options, catering to each individual’s financial goals, investment timeframes, risk appetite and liquidity needs.

You should evaluate these factors before investing in the funds mentioned above. Make an informed investment decision that brings you closer to your financial goals.

(Disclaimer: Opinions/suggestions/advice expressed here in this article are investment experts only. Zee Business suggests its readers consult their investment advisors before making any financial decisions.)