Ask ET Mutual Funds: Schemes for a first-time investor for three years

I am 28 years old. I am a first-time investor with an investment horizon of three years. I want to invest Rs 2,000 per month in HDFC Top 200 and Rs 2,000 per month in DSP BlackRock Income Opportunities Fund. Is it a right investment decision?

--Nikhail Dhir

You have chosen a largecap equity mutual fund scheme (HDFC Top 200) and a credit opportunities fund (DSP BlackRock Income Opportunities Fund) for investments. It is not wise to invest in an equity mutual funds, including largecap schemes, with an investment horizon of just three years. More so, when the market is hovering around its all-time high. You should invest in equity schemes only if you have an investment horizon of at least five to seven years.

DSP BlackRock Income Opportunities Fund is a debt scheme, which falls under the category of credit opportunities funds. These funds may invest in lower-rated papers to earn extra returns. The strategy may back fire sometimes. So, you should invest in it only if you have a higher risk appetite.


Since you are a first-time investor, here are a few suggestions. One, identify a goal first and choose an investment option accordingly. For example, you should pick a largecap scheme or an equity-oriented balanced scheme to meet your long-term goals. You should stick to liquid funds, ultra short-term schemes, short-term schemes for your short-term goals. Investing in long-term debt schemes carries higher risk now, as there is no clear direction interest rate movement in the market. Long-term debt schemes benefit when the interest rates are falling.


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