Which is the best mutual fund in these Covid times? I have a low risk appetite. I want higher returns. I am ready to invest for one to two years.
– Hitesh Bhateja
The best mutual funds for you always depends on your goals, investment horizon and risk profile. The Covid pandemic needs you to be extra cautious, but broadly the definition of best fund remains the same. For example, if you are investing for a year two and you have a low risk appetite, your choice is always bank deposit and debt mutual funds. If you are investing for a year, you may invest in ultra short duration funds. If you are investing for two years or more, you may consider investing in short duration funds.
You should always keep in mind that low-risk investment options will always offer your lower returns. However, that doesn’t mean that you should opt for higher risk options to get higher returns while investing for short periods. Such a strategy could be counterproductive. When you are investing for a short period, your priority should be to protect your capital, not to earn higher returns. If you lose money due to sudden change in the market situation, you would not be able to recoup your losses in a short period. This is the reason why investment advisors ask you to avoid extra risk while investing for a short period. However, you can take extra risk and invest in equity mutual funds while investing for long periods because you have the time in hand to wait for the market to correct to make up for your losses.