Start with the purpose, understand the risk.
Categories describe broad approaches, not recommendations. The suitability of a scheme depends on your circumstances, objectives and tolerance for loss.
Equity funds
Participation in long-term business growth.
Invest primarily in shares of companies. Consider a longer horizon and your ability to withstand substantial fluctuations.
Risk perspective
High market risk; capital losses are possible.
Debt funds
Understand the role of fixed income.
Invest in debt and money-market instruments. Evaluate issuer quality, duration and your liquidity needs.
Risk perspective
Credit, interest-rate and liquidity risks; returns are not assured.
Hybrid funds
Different assets, one considered approach.
Combine equity and debt in proportions defined by the scheme. Assess the actual allocation rather than assuming lower risk.
Risk perspective
Market and debt-related risks vary with the allocation.
Index funds
A systematic approach to market exposure.
Seek to track an underlying index. Consider the index composition, expenses and tracking difference.
Risk perspective
Carry the risks of the underlying index and tracking error.
Liquid funds
A closer look at short-term liquidity.
Invest in short-maturity debt and money-market instruments. Review redemption rules and scheme documents.
Risk perspective
Not equivalent to a bank deposit; credit and liquidity risks remain.
Tax-saving funds
Invest with the full picture in view.
ELSS funds invest primarily in equities and carry a statutory three-year lock-in for each investment. Tax eligibility depends on current law and your chosen tax regime.
Risk perspective
Equity market risk; tax benefits and rules can change.
Read the scheme information document, key information memorandum and current Riskometer before investing. Mutual fund investments are subject to market risks. Past performance does not guarantee future results.