Should I invest the entire corpus in mutual funds?

I can invest Rs 1 lakh per month. How should I channelise my investments? Shall I invest completely in mutual funds or shall I use PPF and fixed deposits from bank? If the answer is to invest in mutual funds, how much should I diversify in various categories of mutual funds?
--Gaurav Yadav

Your goals, investment horizon and risk profile dictate your investment options. You have not mentioned any of these details, so it won’t be possible to offer an investment plan to you. Here are a few guidelines you can make use of.

To begin with, you should set aside some money for an emergency. This emergency fund can be in bank deposits and liquid funds. Next, invest in suitable debt mutual funds or bank deposits to achieve your short-term goals. You can consider investing equity mutual fund schemes to achieve your long-term goals.


Here is the link to our recommended equity mutual fund portfolios. This will give you an idea how mutual fund investments are made keeping in mind the risk profile and diversification.