People do not understand the concept of Mutual Fund portfolio, starting an SIP of minimum amount is considered to be an investment. Such an investment proves to be of no worth in the financial portfolio as the amount so invested is very low, almost negligible as compared to the monthly income earned.
An individual should invest at least 20-25% of his monthly income in different avenues. The most popular Investment avenue available today is Mutual Funds, so a majority of Investment can be made in Mutual funds. This Investment should be done with a proper strategy, there are multiple options available in mutual funds too, namely Large cap funds, mid cap funds, small cap funds, multi cap funds, hybrid funds, etc. Every investor should choose funds according his risk appetite and expected returns. Risk and returns in case of mutual funds are directly proportional. Higher the risk higher the returns. This doesn’t mean that a person should concentrate his Investment in a single sector or fund. A mutual fund portfolio should be properly diversified in different sectors. This Diversification also depends on the Age of the investor. As the age of investor increases the risk appetite decreases. Age and risk are inversely proportional. Highest risk in mutual funds is in small and mid cap funds where are debt or Hybrid funds have the least risk.
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