Today Indian mutual fund industry has become highly competitive. Many fund houses have entered the fray and have started offering many mutual fund schemes with innovative schemes. This is sure to confuse many investors. So how do you go about selecting the right mutual fund for your investment?

Here are some tips to help you select the right mutual fund.

• What is your age? Younger people can take more risk as they have a long earning life in front of them. Older you get, lesser the risk you need to get. So it is advisable for youth to invest a bulk of their investment corpus in equity mutual funds, while older people can opt for debt or balanced funds.
• Are you a senior citizen looking for a monthly income? If yes, then opt for monthly income plans from mutual funds. While the income from these plans is not guaranteed, it is sure to help you earn income.
• Do you have some spare cash that you need to use for some other purpose after some time? Then opt for liquid funds. They will let you redeem your money within 24 hours, while fetching you returns higher than your bank account.
• Do you want high returns but don’t want to risk associated with equities? Then opt for gold funds. These funds simply track the prices of gold and there is nobody actively managing the fund. While the returns from these funds cannot beat those from equities, they surely offer returns higher than a normal bank deposits and also offer protection in case the stock markets crash.
• Do you love taking risks? If yes, then go for mutual funds specializing in mid and small caps as these tend to be very aggressive. While they can give you superlative returns they can also be detrimental to your wealth in short-term. If not, choose large cap funds that invest only in the leading companies.

To get the best returns on your money, divide your portfolio between equity, debt and gold funds. In case of equity funds, invest 20-30% in small and mid-cap funds and allocate the rest to large-cap funds. This will give you both the security and high returns.