FAQ On Mutual Funds

1. How much should I invest in mutual funds every month?

Decide how much you can afford to invest. If you can put aside ₹1000 a month which you will not need in the long term, you can invest that amount. Always keep this in mind before investing in mutual funds: invest only the amount that you can leave invested for 10–15 years. If you want the money back in just a few years, then it’s better to choose some other asset.

2. What is a realistic return expectation from mutual funds over 5, 10, 20 years?

You cannot expect any fixed returns from mutual funds. But there are good chances that they will beat inflation and give you positive returns over the long term. If I compare my own portfolio, I see that some funds have given returns of 15%+, some even 20%+, and some around 13–15%. And I am pretty happy with this performance.

3. Can mutual funds help me build a retirement corpus?

Yes, they can help you. If you choose good funds, stay invested for the long term, and avoid switching too often, while reviewing performance periodically and applying your knowledge about mutual funds, then this can be one of the best ways to build your retirement corpus.
You can also check how much retirement corpus you need using our easy-to-use retirement calculator.

4. Which type of mutual funds are suitable for short-term goals (1–3 years)?

For such a short period, it is better to invest in liquid funds or debt funds, as they can serve the purpose with relatively lower risk. You should avoid investing in equity mutual funds for short-term goals because equity markets fluctuate and may not give stable returns in a 1–3 year timeframe.

5. Which mutual funds are good for long-term wealth creation (7+ years)?

For 7+ years, you can choose from good large-cap funds, flexi-cap funds, mid-cap funds, and index funds. I have been investing in mutual funds since 2010, so it has been 15 years for me. In my experience, if you do your homework well, enrich your knowledge about funds, learn how to assess mutual funds for investment, and periodically check and rebalance your portfolio with discipline, you can expect inflation-beating returns.

6. Can I invest in mutual funds for my child’s education/marriage? How to plan?

Actually, this is a good way to secure the future of your children, because equities have outperformed all the asset classes in the long run. And if you invest in good funds for the long term, you may reach your goal much earlier. You can plan by estimating how much money you will need for those purposes, and check the average returns the funds have given in the long term, and then plan how much contribution you need to reach your goal.

7. Should I stop my SIP when the market is falling?

No, you should stay invested. And why should you worry if the market is falling when you have invested with proper work and with a long-term approach? In my experience, every time the market falls, increasing contributions to the fund has given better returns. I have done that and reaped the benefits over the years.

8. Why do returns fluctuate daily in mutual funds?

Returns fluctuate in mutual funds because the market does not move in a straight line, and the stocks or assets where the fund has invested also move the same way. Every day, some stocks may go up and some may go down, and on some days they may all go up or all go down. This is why some days we see our fund value has increased and some days it has decreased.

9. How do I stay disciplined during market volatility?

If you have invested in good funds with thorough work, you need to have faith in your decisions and stay invested. So, before investing, do good work and read all the information well. Check whether your risk profile matches with the funds, and if everything is good, then don't worry. Volatility comes and goes.

10. How many mutual funds should a beginner hold?

It is better to have 1 large cap, one mid cap, one small cap or mix fund and one index fund. The goal is to have your portfolio invested in well diversified assets. However, in the beginning many people are so excited that they carry 10-15 funds and some even more. But over time when they learn, they reduce and rebalance. So why to do later, do it now with less but good funds.

11. When should I rebalance my mutual fund portfolio?

You should rebalance your portfolio if you think it needs to do so. For example, if you want to have 70% equity and 30% debt and your portfolio has grown to more equity, say 90% equity, you can think of rebalancing if you want.

12. Should I switch funds if returns are lower than expected?

You can, but you must give time to your funds. If your fund does not perform well in a timeline where other similar funds have done well, only then you should switch. Switching often will not serve the purpose of investments and you may also have to bear taxes.

13. Can I withdraw mutual funds anytime?

Yes, you can withdraw your mutual fund money anytime, except in schemes that have a lock-in period like ELSS, where your investment is locked for 3 years from the date of purchase. The money you receive will depend on your fund’s NAV at the time of withdrawal and will be credited to your bank account as per the fund’s settlement timeline.

14. What happens to my SIP if I stop investing but keep the units?

When you stop your SIP, your money does not go anywhere. It stays invested in the fund. You already have units, and your fund value is simply the number of units you hold multiplied by the current NAV. So your investment will continue to move up or down based on the market, even if you are not adding more money. 

15. Do I need to monitor mutual funds daily?

No, you don't need to monitor mutual funds daily. Your job is simply to invest consistently and stay disciplined. The short-term ups and downs of the market are normal, and mutual funds are designed for long-term growth. This is the beauty of mutual funds — you don’t have to worry every day.

16. Do mutual funds guarantee no loss?

No, all mutual funds are subject to market risks. There is no guarantee of loss or profit. However, in the long run, many mutual funds have delivered better returns compared to most traditional investment options.

17. Is SIP same as a mutual fund?

No. SIP (Systematic Investment Plan) is not the same as a mutual fund. A mutual fund is an investment product, while SIP is a method of investing in that product by making small, regular contributions over time. Want to know how much you will accumulate through SIP, use our easy to use SIP calculator to get it in a moment.

18. Are mutual funds only for people with high income?

No, there is no such rule. Anybody can invest in mutual funds by fulfilling the basic KYC requirements. And nowadays, you can even start with just ₹100. So it’s not only for high income people — almost anyone who knows about mutual funds can afford to begin.