There are extremely a significant number of mutual fund categories out there. What’s more, they can be generally very confounding. Picking the unsuitable ones can truly hamper the chances of your investments progressing nicely.

Along these lines, in this article, we will attempt to keep things simple. We simply check out the categories appropriate for your objectives that are one, three, five and 10 years away. Furthermore, we likewise consider distinctive investor types (Conservative, Balanced and Aggressive) while picking these categories.

MF Categories for 0-1 years

Equity funds are a straight no. Simply keep it basic and go for pure debt. For various investor types, the next might be suitable.

• Conservative Investor: Liquid funds
• Balanced Investor: Liquid funds, Ultra-Short Duration funds
• Aggressive Investor: Liquid funds, Ultra-Short Duration funds, Arbitrage Funds (more reasonable for those in the higher tax brackets)

MF Categories for 1-3 years

Indeed, this time frame is most appropriate for debt products only. The following categories can be considered.

• Conservative Investor: Liquid funds, Ultra-Short Duration funds, Arbitrage Funds
• Balanced Investor: Ultra-Short Duration funds, Low Duration funds, Money Market funds, Arbitrage Funds
• Aggressive Investor: Ultra-Short Duration funds, Low Duration funds, Arbitrage Funds, Conservative Hybrid Funds

MF Categories for 3-5 years

A few risks can be taken for this time horizon. Be that as it may, exclusively by suitable investor types and not all. Thus, for conservative investors, it is smarter to have pure debt. For other people, a bit of equity can be investigated. The following categories are recommended for various investor types:

• Conservative Investor: Ultra-Short Duration funds, Conservative Hybrid Funds, Banking and PSU funds
• Balanced Investor (for obligation part): Ultra-Short Duration funds, Low Duration funds, Money Market funds, Banking and PSU funds
• Balanced Investor (for equity part): Aggressive Hybrid Fund
• Aggressive Investor (for debt part): Ultra-Short Duration funds, Money Market funds, Corporate Bond funds
• Aggressive Investor (for equity part): Flexicap funds, Large-cap funds, Aggressive Hybrid funds

MF Categories for 6-10+ years

This is a long sufficient time horizon to consider equity seriously. Different investor types will still need to have different equity allocations appropriate for themselves as well as their objectives. The following categories are recommended for various investor types.

• Conservative Investor (for debt part): Ultra-Short Duration funds, Low, Duration funds, Short-Duration funds, Banking and PSU funds, Conservative Hybrid Funds
• Conservative Investor (for equity part): Large-cap funds, Aggressive Hybrid funds
• Balanced Investor (for debt part): Ultra-Short Duration funds, Low Duration funds, Short-Duration funds, Banking and PSU funds
• Balanced Investor (for equity part): Flexicap funds, Large-cap funds, Large-and Midcap Funds, International Funds
• Aggressive Investor (for debt part): Low Duration Funds, Short-Duration funds, Corporate Bond funds
• Aggressive Investor (for equity part): Flexicap funds, Large-cap funds, Large-and Midcap Funds, Midcap and Smallcap Funds, International Funds, Aggressive Hybrid funds,

The above listing looks crowded. In any case, pick an investor type and afterward take a gander at the category suggestions to get the right direction.

You can, obviously, go external these suggestions and invest somewhere else (in different categories) also. However, the suggestions made above are adequate for a greater part of the retail investors. Additionally, not all investment products/categories are appropriate for investments. A few products that are best stayed away from by most investors. So don’t wander into these except if you totally know what you are getting into.

For most investors, it’s smarter to stick to funds with more limited duration portfolios. These have similarly lower interest rate hazard and, whenever picked well, additionally offer low credit risk. The fact is, when investing in debt, better avoid any and all risks and straightforward. For return maximization, equity is now there, so why face unnecessary risks in the debt side of the portfolio and lose sleep?

Coincidentally, simply picking the right fund category will not help. As the funds within every category itself shift from being acceptable, not very great and downright horrendous ones. Thus, you should be cautious while picking funds from the recommended categories.