Choosing mutual fund schemes depending on your age to achieve life goals

The choice of mutual fund (MF) scheme might be influenced by one’s risk profile or age.

- Sanjeev Puri

Building a portfolio of mutual fund schemes based on your age will help you achieve your goals. Let’s look at how investors can make the best use of mutual fund schemes at various phases of their lives to attain their goals.

The 20s investor

When you are starting, it’s easier to commit money for long periods, as you have few financial responsibilities and are in a position to take risks with your investments. The other advantage of starting young is that mid-course corrections are possible without any major impact on your portfolio.

Hence, your fund’s portfolio should be heavy on equity funds–around 80 per cent if you are the aggressive type; even if you are the conservative type, a 60 per cent allocation to equity funds is a good idea.

Seek liquidity and risk-containment through debt funds, and invest only that portion of your savings there that you feel you may need over the next three years.

Young aggressive investors can also look to invest 30 per cent of their equity funds portfolio in midcap and thematic funds. But remember, these schemes target a smaller group of less-visible, less-traded stocks, and so are considered more volatile.

The 30s investor