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The Only 3 Mutual Funds You Need to Retire Rich

Must read for beginners and steady investors!

Author

SK
August 13, 2025

Hello,

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

This is the article #8. If you’ve missed the previous ones, read it now!

When I first started investing- I followed multiple finance influencers from Youtube and Instagram (you know them too!) and chose only top and best performing funds. I had around 10 mutual funds!

I didn’t know what I actually owned - and many funds were holding the same stocks. What does this mean? Due to fund overlaps, my returns were not that great (barely making 7-8%)!

After a year or so- I learnt something powerful:

You don’t need 10 different mutual funds to grow your wealth.
You just need 3 - if they cover different parts of the market.

This is the strategy I recommend for beginners and steady investors.

For those who are not into mutual funds, feel free to skip this post.

But, you should read this post, if -

[1] You invest in mutual funds or planning to invest in mutual funds

[2] Your portfolio is a mess or portfolio is not giving anticipated returns

[3] You spend too much time on selecting the mutual funds

So, here we go…

Nifty 50 Index Fund

Think of this as the foundation of your house.

  • It invests in India’s 50 largest, most established companies - Reliance, TCS, HDFC Bank, Infosys, etc.

  • These companies grow with the Indian economy.

  • It’s low-cost and needs no active decision-making.

Why it’s important: Stability. This portion will keep your portfolio strong even in rough markets.

Nifty Next 50 Index Fund

This is where things get exciting.

  • These are the 50 companies just below the Nifty 50 in size.

  • Historically, many of them graduate into the Nifty 50.

  • They’re faster-growing than large caps, but more stable than small caps.

Why it’s important: Growth. It captures India’s next generation of big companies before they become household names.

Flexi-cap Fund

This is your “smart” fund.

  • Managed by professionals who can invest in large, mid, and small caps based on market conditions.

  • Gives your portfolio a human touch, especially useful during volatile markets.

Why it’s important: Flexibility. When large caps are expensive, the manager can shift to mid/small caps, and vice versa.

How to Allocate

If you’re just starting out:

  • 40% → Nifty 50 Index Fund

  • 30% → Nifty Next 50 Index Fund

  • 30% → Flexi-cap Fund

What Happens If You Stick With It?

Let’s say you invest ₹15,000/month

  • ₹6,000 → Nifty 50

  • ₹4,500 → Nifty Next 50

  • ₹4,500 → Flexi-cap).

After 20 years, at a conservative 11% CAGR, your portfolio could grow to ₹1.2–1.5 crore.

If the markets do better (12–13%), you’re looking at ₹2+ crore - and that’s without any “hot stock tips” or risky trading.

Note: You should need to factor inflation to get a picture of true returns.

I recommend this low-effort path especially for beginners and others who don’t have time to manage their funds actively

Few tips before you leave:

  • Pick direct growth plans for all 3 funds (lower costs).

  • Automate your SIPs.

  • Check allocation only once a year - rebalance if needed.

  • Most importantly: Don’t stop investing during a crash. That’s when you get the best prices.

Disclaimer: I’m not naming any particular fund house; for these specific funds, you can go with any big name which has the least expense ratio.

That’s all for today. See you again!

Do share this with your friends who are starting their investment journey!

Yours,
Paisa Monk!