Depending on every individuals financial requirements and savings’ goals, investing in mutual funds have various approaches.
Most financial advisors suggest investors to have a goal oriented approach. For example, if Mr. A’s financial goal is to prepay his home loan with 10 years remaining for the loan tenor, he can look out for investing in SIPs which can guarantee returns of the required amount payable in 4-5 years.
If your financial goal is to provide for your post retirement needs, then building a strong financial corpus which can support all your post retirement needs is what is required. This will be your long term goal and a disciplined investing pattern is required.
An existing investor holding MFs then it is very important to review your portfolio at least once in a year, so that you can make changes in areas where your fund is not delivering what it promised. This will help you not lose out on your hard earned savings.
For your short term goals, equity-oriented funds, with the average equity exposure over the past one year being greater than 60%, which makes these funds less volatile and risky for short durations. Adopting this approach can help you accumulate funds, if you intend to buy a car by the end of next year.
Your ability to build a corpus depends on how much you can save invest. The more you invest the better returns you can get. Generally, investing at least 40% of your income is what is required.