It is already established why a smart investor will pick a portfolio according to an investment objective or ‘goal’ already formulated by him. Even so, each investor will have an objective that speaks a particular tendency or personality i.e. his ‘risk tolerance’ in the market. The investment plan will thus adhere to the investor’s age, his objective and the personality.
Let us help you understand which plan will suit your investment needs best.

Disclaimer: As the value of securities in the fund increases, the fund's unit price will also increase. You can make a profit by selling the units at a price higher than at which you bought. Although, Mutual Fund does not guarantee the same.

If we interpret the kind of returns we would get for each of the mutual fund products, based on its risk factor, we could a plot a graph in the following manner:

Model 1: The Aggressive Plan

As the name suggests, an Aggressive Plan is that which leans towards more risk. This is best suited to those investors that are in their prime earning years and are willing to take the risk. However, this is also a plan which can render more growth in a long-term.

Model 2: The Moderate Plan

The second plan: Moderate, is for investors who are more interested in moderate growth and similar income. This plan suggests a larger amount of balanced schemes that do not incur as much risk. Investors can thus expect growth as well as stability.

Model 3: The Conservative Plan

The Conservative Plan steps in as most suitable for investors that are retired and are better off preserving their capital. A substantial number of income schemes will also provide them with regular income.

In short, while selecting a mutual fund it is necessary to evaluate your past performance. Based on these observations, pick up the most consistent areas. Let us illustrate this with an example:

Looking at the above chart, Fund C seems to be the most consistent.

Making observations on your own can never be enough. It is thus important to make decisions based on information assembled from expert sources. This gap is filled in by ‘Rating Agencies’.

Along with facilitating informed decisions regarding your investments, a Rating Agency will also:

• Provide independent and reliable opinion of schemes
• Establish the quality of the fund’s management and operations
• Help meet specific investment objective

Let us look at some prominent Rating Agencies that will make your job easier: