What is the best Mutual Fund to invest?

There is no single best fund to invest. There are different types of funds that can be chosen for different types of requirements.

The fund that is most appropriate for most Indians is the Equity Large and Mid Cap fund, which invests in shares of Indian companies listed on the National Stock Exchange or the Bombay Stock Exchange. The reason why this type of fund is most appropriate is because most Indians do not invest in equities in a systematic long term manner to build wealth. The absence of this fund in your portfolio will cause large and lasting damage to your financial well being. These funds are best used for investments of 10, 20 even 30 years. An investor can choose to supplement these funds with Small and Mid Cap funds to boost risk and return. For a young person investing for a long time, this is the fund that matters.

For those who wish to place large sums of money for a short period of time, it is better to go with short term debt funds. These funds are easily replaced by bank fixed deposits, but they are usually better than bank FDs. In any case, even if you do not have these funds in your portfolio, it will not cause much harm unless you are placing very very large sums of money idle in a bank account. This is a 'nice to have' fund for most Indians, and a 'must have' fund for cash rich Indians.

Other funds are useful if you have a specific view on the share market. For example, infrastructure funds, pharma funds, technology funds, etc. are useful only if you believe that these sectors will do better than the economy as a whole. Similarly, long term debt funds are useful if you believe interest rates will fall.

From here on complexity in Mutual Funds increases. There are many funds for many different requirements. There is, however, NO single best fund.

What are the Sensex and the Nifty? How can I invest in them?

The Sensex is a number based on the average share price of a list of the 30 largest companies in India. To calculate it they took the prices of the top 30 companies in India, calculated an average, set that average at 100 in 1979 and are now measuring changes since that date.

Nifty is similar, but covers 50 companies and started at a different date.

You can invest in Sensex or Nifty through a variety of ways:

1. You can buy Index Futures.

2. You can buy an Index Exchange Traded Fund

3. You can buy an Index Mutual Fund

4. Or the best way - you can buy a Mutual Fund that uses the Sensex or Nifty as its benchmark.

A Mutual Fund that uses the Sensex or Nifty as its benchmark is the simplest, most effective way to invest in the India growth story. It is also the most important part of your personal financial plan because it is responsible for creating up to 90% of your personal wealth.

Write to us at SphereGreen.Investments@gmail.com to invest or to ask any questions regarding your personal investments in Mutual Funds.