Hello,

Welcome to Paisa Monk → No non-sense finance content for middle class Indians!

I de-influence the personal finance to most popular Indian audience- the mighty middle class segment!

Today, I talk about the most asked question in my DMs- “suggest me a best mutual fund?”

Most of us do this:

• Ask a cousin/broker “Which mutual fund is good?”

• See an ad on YouTube or Instagram and invest blindly

• Or even worse, copy what you office colleague is doing

👉 Result? You either end up with wrong mutual funds or too many funds and then complain “Mutual funds sahi nahi hai.”

But, here’s the truth bomb:

Here’s a 5-step rulebook for you to choose a mutual fund, bookmark this one!

# 1: Decide Your Goal & Time Frame First

Don’t pick funds randomly. Ask:

• “Why am I investing?” → Retirement? Buying a house? Child’s education?

• “When will I need this money?”

Thumb Rule:

• Less than 3 years → Don’t go for equity funds. Go for Debt/Arbitrage/Fixed Deposits.

• 3–5 years → Balanced/Hybrid funds.

• 5+ years → Equity mutual funds (SIPs in index/multi-cap/mid-cap).

You don’t take a flight for a 2 km distance, right? You rather walk or get on a bike. Same goes for mutual funds!

# 2: Stick to Index Funds for Simplicity

If you’re new, start with funds that track the market.

• Nifty 50 Index Fund

• Sensex Index Fund

Why?
According to SPIVA India Report (2023), 80%+ active mutual funds underperform the index over 10 years.

That means the market itself beats most star fund managers.

Why pay ₹500 for Swiggy delivery when the restaurant is next door? Similarly, why pay high fees for fund managers when an index fund gives better results at lower cost?

In case you’re wondering which index funds to choose from, read this one and thank me later!

# 3: Check Just 3 Things Before Investing

Forget complicated financial ratios. Look at only these:

1. Expense Ratio → Lower is better. For index funds, <0.2% is good.

2. Fund Size (AUM) → Not too small, not too big. Anything above ₹1,000 crore is safe.

3. Track Record → See if the fund has stayed close to its benchmark for 5+ years.

When buying a phone, you check battery life, camera, and price. Same here - just 3 checks are enough.

# 4: Don’t Chase Returns

The biggest trap: “This fund gave 40% last year, let’s buy it!”

Reality: That 40% performer today might be the worst next year.

Instead, focus on:

• Long-term average (5–10 years CAGR)

• Consistency across market cycles

# 5: Diversify, But Don’t Overdo

2–3 funds are enough for 90% of people.

• 1 Large-cap / Index fund

• 1 Flexi/Multi-cap

• 1 Mid-cap (optional if you want higher growth)

Having 8–10 funds = duplication. It’s like having 10 phones but using only one SIM!

Next time your cousin asks, “Which mutual fund should I invest in?”, don’t forward this. Just smile and say: “PaisaMonk taught me. I don’t depend on anyone now.”

📢 Share this with your friends and save them from bad advice!

That’s all for today, see you again! Happy investing.

Yours,
PaisaMonk!