Thanks to their liquidity and flexibility, mutual funds (MF) are a great way to grow your money. And the sooner you start your investment journey, the more likely you are to enjoy superior returns and wealth creation. Still, your decision to begin investing in MFs should be based on your risk tolerance and financial goals. 

This article will take you through some factors to help you determine the ideal time for investing. Also, we will explore the best mutual funds to invest right now.

Factors that determine the best time to invest in mutual funds

You can use mutual funds to invest nowand start building your corpus today! Here are some factors that will help you get an idea of the right time to begin your investment.

Return on investment

If you want to achieve high ROI over the long term, equity funds are your best bet. On the other hand, you can distribute the risk over time by investing in SIPs (Systematic Investment Plans).You must bear in mind that you have to stay invested for a minimum of three years to enjoy good returns. Accordingly, you can decide on your investment timing.

Investment horizon

Your financial goals influence whether you should go for a short-term or a long-term investment. For short-term goals like the down payment of a house, purchasing a vehicle, taking a vacation, etc., you can choose a short-term horizon. For this, any debt fund option is prudent, like government securities, commercial papers, etc.Alternatively, for long-term goals such as a wedding, education, retirement, etc., you can opt for equity funds. Long-term investments typically yield higher returns, as the risk is higher.

Market situation

MFs are market-linked products. Thus, you can calculate your investment timing by observing market trends. If you have a high risk appetite, enter the market at any time.If you want to avoid risk, enter the market once it corrects.

Risk appetite

Analysing your risk profile helps you determine the investment amount, duration, fund type and ultimately the timing for the best MF to invest now. Depending on your tolerance for risk, you can choose from debt, equity, and hybrid funds. Choose equity funds for a substantial capital appreciation if you’re willing to bear the risk.

Additional Read: Investment Strategy during Market Highs

Start investing early

The earlier you start investing in mutual funds, the greater will be the returns you enjoy. Let’s understand this through an example.

Say, A and B are individuals who start their investment journey at different ages.

A, at the age of 25, invests Rs. 10,000 in an SIP offering a return of 10%. By the time A is 55 years old, their corpus will have grown to Rs. 2,27,93,253.

B2, at the age of 35, invests the same amount in the same SIP. By the age of 55, their corpus will only grow to Rs. 76,56,969. The table below illustrates the returns in greater detail.

 Retirement age 55
10% return Rs. 10,00030 years old35 years old40 years old45 years old50 years old55 years old
AStart age 257808242065520417924376569691337890322793253
 BStart age 3500780824206552041792437656969

So, you can see how much of a difference even 10 years can make. Thus, the earlier you start investing in a mutual fund, the more wealth you create over your lifetime.

Top performing mutual funds to invest in today

Here are some of the best mutual funds to invest nowin India.

Mutual fund nameThree-year returns
Canara Robeco Bluechip Equity Fund – Direct Plan-Growth18.55% p.a.
Quant Multi-Asset Fund25.63% p.a.
PGIM India Flexi Cap Fund22.02% p.a
ICICI Prudential Thematic Advantage Fund (FOF)17.55% p.a
IIFL Focused Equity Fund – Growth19.82% p.a.
Axis Midcap Fund18.2% p.a.
Axis Banking and PSU Debt Fund8.95% p.a.

Additional Read: Investment when market is high

Over to you

There is no time better than today to start investing in mutual funds. The sooner you begin your investment journey, the more rewarding it is bound to be. Make informed decisions by keeping a watch on the market, comparing different schemes, and conducting thorough research on what they offer. Get Tata Capital’s Moneyfy app today and choose the right scheme according to as your goals, risk profile, and more.

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