How to Pick the Best Performing Mutual Funds for Your Portfolio

Lucrative returns and a diversified portfolio make Mutual Funds one of the most sought after investment choices for all investors. However, it is well known that no single scheme or set of schemes suits everyone. Instead, the best scheme is the only one that suits an individual’s investment objective and risk appetite. 

Now, undoubtedly, mutual funds are one of the most effective methods for long-term wealth creation, so it is important to know the best performing mutual funds. But to know this, there are certain factors one needs to identify before investing. 

Remember, investment is not just searching for the ‘best mutual fund to invest today‘ and clicking on the top search engine page result. But investment takes a lot of time and effort. 

Here are the top factors to consider while picking the best-performing mutual funds for your portfolio – 

1. Identify your ultimate goal

Investment is always dependent on the goal. So be it anything, we all invest after keeping the result in mind. So, it is essential to calculate the real value of your investment goals while chalking out your financial plan. The real value of goals can mean their current rate plus the inflation over the investing period.

2. Identify your risk

Different kinds of mutual funds come with different degrees of risk. Therefore, your risk appetite majorly influences your mutual fund investment choices. So, if you search for the ‘best mutual fund to invest today‘ on the internet, make sure you do thorough research. To simply understand, it means the risk you can take as an investor.

3. Fund Performance

The performance of the fund you plan to invest in should be considered for a reasonable time frame. So, it is essential for you to know if the tax saver mutual funds you are going for have been able to beat its benchmark over three, five or even ten years or not. 

4. Asset Allocation

Another significant factor before opting for, say, the best mutual funds for sip is the right asset allocation. This simply means how much money you can allocate to which types of mutual funds to meet your financial goals, duly considering your risk appetite. 

5. Financial advice

There’s no harm in seeking professional advice at this stage of your life. For example, in my case, when I was also planning to invest in the best tax saver mutual funds, I first talked to one of my friends who has been in this sphere for the past decade. They help you choose funds that are apt for your financial goals. 

Your hard-earned money should be invested after proper in-depth research to get the desired results. Now, we all know that when mutual funds were introduced in India way back, there was not much awareness. However, several platforms now provide the necessary resources and the option to invest in the best performing mutual funds

Honestly, I’ve been using the Bajaj Finserv application for the past year and recently learned that one can invest in mutual funds on the app only. I had invested in mutual funds for my younger daughter’s higher education.

So, remember, mutual funds are one of the best investments to create long-term wealth, but it is very important to keep certain factors in mind.