Home / Money / Personal Finance /  Which mutual funds can give the best returns in the long term?

I am a 23-year-old central government employee and want to start investing in mutual funds through monthly SIP (systematic investment plan). I can invest 10,000 per month or more. Which are the best funds that I can invest in to get good returns in the long-term?

—Name withheld on request


In investing, they say it is more important to give time to your investment instead of timing it. This will work well for you as you plan to start investing in mutual funds at an early age. Mutual funds are one of the best investment instruments for all kinds of financial goals. 

These goals can be short, mid or long-term in nature. MFs have different categories of funds for these goals. For you too, we would suggest defining your financial goals and then invest accordingly. You may consider wealth creation as your goal at this stage and plan to use the accumulated corpus for different goals at a later stage. 

As you are young, you can follow a little aggressive approach in building your portfolio. You can diversify your investment predominantly across large, large & mid cap and flexi cap funds. You can also consider investing in a mid cap fund, however, the allocation can be restricted to 10% in the beginning. To keep the investment well diversified across the funds and fund houses, you can consider an allocation of up to 15-20% in a fund at the time of investment.

Following are the funds in our view that you can consider investing in from a long-term perspective — Any Nifty Index Fund (18%), Canara Robeco Bluechip Fund (18%), Parag Parikh Flexi Cap Fund (18%), Mirae Emerging Bluechip Fund (18%), IIFL Focused Equity Fund (18%) and Kotak Emerging Equity Fund (10%).

Many investors follow a strategy of stepping up their SIPs every year which helps them to remain disciplined and build a much higher corpus as they progress in their careers. You can also follow this strategy as it is very helpful in the long run. 

Reviewing your investment every six or 12 months to check how your investments are progressing is an equally important part of your overall investment plan.

Harshad Chetanwala is co-founder at MyWealthGrowth.com.

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