Starting out in mutual funds? Here’s how to allocate your investments

Feb 14, 2026, 09:58:29 AM IST

Wealth managers say first‑time mutual fund investors, and those shifting money from fixed income products , should construct their portfolios gradually rather than committing large sums at once. A paced approach, they say, helps investors align choices with goals, time horizons and risk appetite, as reported by ETBureau.

IANS

Start slow. Investors should build their portfolios over time instead of allocating everything in one go. The mix of assets: equity, fixed income, international equity and precious metals, should reflect one’s investment horizon and risk profile.

Getty Images

Aggressive investors may prefer a higher equity allocation, including some exposure to mid and small‑cap funds. Conservative investors may want to stick with large cap oriented categories and maintain higher allocations to fixed income and precious metals, often through hybrid or multi‑asset funds.

Getty Images

Young investors with investment horizons of seven years or more can begin with Systematic Investment Plans (SIPs) in diversified equity funds, index funds and multi‑asset allocation funds. Those who want to avoid fund‑manager risk can choose large‑cap index funds that track the Nifty 50, Nifty Next 50, Nifty 100 or the Sensex.

Conservative investors could start with a multi‑asset allocation fund. Once this core allocation is in place, investors can add exposure to specific asset classes based on long‑term goals. Aggressive equity investors can begin with index funds and diversified equity funds. They may also stagger their equity invest‑ments over six months to manage volatility.

iStock

Investors who want to park money temporarily, either before deploying a lump sum or while waiting for clearer market cues, can consider arbitrage funds. Those whose income is not taxable or who fall in lower tax brackets may look at short‑duration debt funds, which carry minimal interest‑rate risk

These categories aren’t ideal for first‑time investors or those transitioning from fixed‑income products. Once investors understand how equities behave and are comfortable with associated risks, they can consider modest allocations to mid‑ and small‑cap funds.

IANS

Seasoned investors may earmark a small portion, generally not more than 10% of their overall portfolio, for thematic ideas. If their risk profile allows allocation to mid‑ and small‑caps, a staggered approach helps manage volatility. Wealth managers caution against narrow thematic or sectoral funds, which often require precise entry and exit timing.

ANI