My mother wants to invest Rs 30,000 (approximately price of one sovereign of gold) for my three-month-old daughter. Her aim is to buy gold for my daughter’s marriage which will happen after 23-25 years. Should she invest in gold now or invest a lumpsum in mutual funds for 23-25 years and buy gold? If investing in mutual fund is better, then which cap would be better for this period? Or is there any other better scheme for this scenario?
-Akhil Kuriachen
Since you have a long investment horizon, you may consider investing in equity mutual funds. Equity has the potential to offer superior returns than other asset classes, including gold, over a long period. Also, stocks can offer you inflation-beating returns.
You should choose your equity mutual funds based on your risk profile. For example, if you are a conservative equity investor, you should invest mostly in aggressive hybrid schemes or
large cap mutual funds. Moderate investors can consider investing in multi cap mutual fund schemes. Aggressive investors can opt for risky options like mid cap and small cap mutual funds.
Here are some useful links
Best small cap mutual funds to invest in 2019