Generating wealth is the goal of most investors and to do this, mutual funds offer an appealing method. Today, the best option for portfolio diversification and wealth growth is to invest in mutual funds. These funds are offered in a range and there are different kinds of funds to suit most investor categories. Depending on your horizon of investment and risk profile, you can invest in mutual funds with the best wealth creation opportunities in India currently. As you may have gathered, investing in equity-focused mutual funds can give you the optimal returns you require.
Also Read: List of Best Short-term Mutual Fund Options for Quick Returns
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Mutual Funds – Wealth Growth Funds
As you may know, a mutual fund is a fund that pools the money of different investors and invests it in equity or other securities. In the category of equity-based mutual funds, any mutual fund invests in company stocks. A mutual fund that is equity-focused may invest in stocks of small-cap companies, mid-cap companies, large-cap companies, or a combination of two categories.
Going by the historical performance of mutual funds in general, large-cap mutual funds are those with the most growth prospects as these mutual funds invest in stocks of large-cap companies that are well-established and have shown optimal performance in their sectors. You may say that investing in such funds carries a potentially lower risk than investing in other kinds of mutual funds. The best mutual funds to invest in may be the ones suited to individual investor goals and financial requirements. Given this, investors may choose funds based on their unique goals and financial standing.
Small-cap Mutual Funds – Good for Growth?
Large-cap companies have a distinctive edge over smaller market capitalisation companies because they have proved their mettle in the industries and sectors they belong to. Small-cap companies have smaller market capitalisation compared to large-capitalisation companies and may be on the growth path. As they are small companies, they may be viewed as risky and not as well-established as larger companies. However, on the flip side, they are growing companies and if they are successful in the future, they have the potential to yield positive returns. Investing in such companies may give you long-term optimal returns as small-caps gradually grow and become prosperous. So, among the best mutual funds in India, with a view toward long-term growth, small-caps, and large-caps may be considered for investment.
Also Read: How To Buy Mutual Funds Online Without A Demat Account
Before You Think of the Best Mutual Funds to Invest In for the Long Term
Before you consider the best mutual funds for long-term wealth creation, you need to consider some factors when you think of mutual fund investment. These are highlighted below:
- The Trade-Off of Risk and Returns
There are several categories to invest in mutual funds and deciding which is more risky than the other may be a confusing task. The trade-off between risk and return varies with different mutual funds and mutual fund categories and there is no measure to gauge this. You could say, that like investment in direct equity, mutual funds also pose a degree of risk.
- Match Investments in Mutual Funds
The best mutual funds to invest in 2023 in india for the long term may be those that match your distinct investor profile and financial goals. Every investor is not the same and different individuals invest for different reasons. If you want capital gains then investing in long-term funds may suit you more than short-term funds, so you may want to remain invested for a year or so.
- Find a Rationale for the Fund
There are many promotions for particular mutual funds in the media and experts may advise you to invest. However, the rationale for investment in any fund depends on your own research regarding the stability of a particular fund, its past returns, the financial advisor, annual returns, expense ratio, etc. Consequently, the fund that you invest in for long-term growth depends on your analysis of several different funds.
- Consider Your Likely Returns
There is no guarantee or assurance regarding the returns of mutual funds. While you may get consistent returns for two years, this may not be the case in the third year. As people talk about annualised returns, this may confuse you into thinking that you can get the same returns every year. This is not the case, as like all equity investments, returns cannot be assured with mutual funds.
The Best Mutual Funds to Invest – the Top 10
Here are some of the best mutual funds you can invest in for long-term wealth creation in India today:
- Mirae Asset Tax Saver Funds Direct-Growth
- DSP Tax Saver Direct Plan-Growth
- SBI Focused Equity Fund Direct Plan-Growth
- Canara Robeco Emerging Equities Fund Direct-Growth
- Tata Digital India Fund Direct-Growth
- Quant Small Cap Fund
- Axis Small Cap Fund
- Kotak Emerging Equity Fund
- ICICI Prudential Large Fund
- Nippon India Growth Fund
Final Words on Growth Mutual Funds
Long-term growth through any investment instrument indicates long-term investment. If you want to avail of the potential positive returns that long-term mutual funds may give you, you must choose those funds that keep you invested over a long period. Before you decide to invest, you must view the fundamentals of funds and make informed decisions. Mutual funds are tempting to invest in, but there are risks and rewards and you must invest aligned with your unique goals and investor profile.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only.
