What Works Best For You

A friend of mine recently asked me for help with his financial portfolio—he already invests in some mutual funds and wanted to add some more “SIPs with growth potential”. The popularity of SIPs has perhaps outpaced that of even mutual funds, which came up with the idea in the first place. That, of course, leads to the complication of mis-selling, where any product that can be paid for using regular instalments is sold as an SIP. But that’s a story for another time.

One of the biggest reasons that makes SIPs so popular is the fact that it enables even investors with modest means to start investing and planning for their future. Even the ones who want to start slow prefer this mode of investment, as the low ticket size gives them the confidence to experiment. My friend, too, started investing with low-value SIPs, but is now confident to go for bigger sums.

Luckily for him, Outlook Money has an in-house list of mutual funds, OLM 50, curated and handpicked by our deputy editor Kundan Kishore. The list is backed by in-depth quantitative and qualitative analysis. We just reviewed the list in the June issue, and I told my friend to pick up funds from there, as per his needs. Then I told him to get a better understanding of the funds he already owns by referring to our July issue on India’s Best Funds 2023. We have rated fund across major categories that are relevant for retail investors along with Morningstar India and have gone a step ahead to analyse the 5-star-rated ones in detail for your sake. This list is largely backed by quantitative analysis and is not a recommendation.

Meanwhile, during the conversation with my friend, two typical behavioural issues that most investors face came up. One, when I asked him if he was looking to save for a specific goal, he drew a blank. He wasn’t even sure if he wanted the money in the short or long term. “I just want to hold good funds that give me good growth” was all he could come up with.

That’s one of the major mistakes that most investors make. Setting financial goals can help you quantify the growth you are looking for, and that can narrow down your investment choices for you.

Two, the desire to invest more than he already did was a positive but the unwillingness to pay a fee to a professional financial advisor was puzzling. Financial fitness is almost as much a fad as physical fitness among the urban mass affluent. Awareness is going up and people are realising that it’s good to invest more, and in instruments other than the traditional fixed deposits and real estate. But while most of this section won’t shy of joining a professional gym or consulting a professional trainer for their physical fitness, few of them like to spend on financial fitness.

There is no dearth of financial advice these days, with finfluencers dominating the social media. While all of it may not necessarily be bad, it makes sense to watch out. Pick up our next issue to understand the financial advisory landscape in India and how it can help you attain financial freedom.

Financial advice that can really work for you needs to be tailored to your life and aspirations, and for that you need a personal financial coach who is a professional.

Then why consult this Best Funds list? That’s because even when you are consulting a professional advisor, you need to do some amount of due diligence on your own to make sure you are on the right track.