Ask Aditya Newsletter - 16th Jan, 2025

I'm 30 years old what should I invest in? What should I do if my investment returns are negative? Which is the best fund for SWP?

Aditya Nain, Ph.D., is an author, professor, columnist and digital creator. He is an AMFI registered mutual fund distributor who works with over 100 clients all over India and abroad. If you want to set up a consultation call, please DM him on Instagram and ask for details.

1. I am 30 and starting my investment journey now. Which funds should I choose, and how should I allocate to each fund?”

Firstly, it’s great that you’re starting to invest! Let’s assume your investment goal is retirement. If you retire at 60, that gives you a 30-year investment time horizon. Time is definitely on your side!

In any case, I’ll assume that you can remain invested for at least seven years and that you’re starting a monthly SIP. To make things simple for a new investor, I suggest starting a SIP in just one fund.

Here are four good one-fund options:

All the above options are excellent, but none is “the best.” If you’re extremely confused and cannot make up your mind, I recommend starting with a multi-asset allocation fund.

Please thoroughly research each option before deciding which one to go for.

2. I started investing a few months ago. My investments are negative. Should I hold on or sell my funds?”

Negative returns are part and parcel of the market—you can’t escape it. If the market is down, your investments will be down. Ideally, don’t sell your investments just because they’re in the negative. Panic selling is the most common mistake for a new investor. As long as you invested in a good fund, there is no reason to panic during a down phase.

When markets are down, always zoom out. Ask yourself why you invested. What was your investment goal and time horizon? If you invested with a 10-year time horizon, then keep that in mind and don’t look at the market every day. The market may be down this month, but over the long run, it trends upwards.

But, if you invested to make a quick buck, then maybe cut your losses and exit.

Equity funds are only for long-term investors—7 years plus. If you can’t invest for that duration, it’s best to stay away.

3. Which is the best fund for a SWP?

Systematic Withdrawal Plan (SWP) is a way of automatically withdrawing money regularly from your mutual fund into your bank account. It’s the opposite of an SIP. SWP can be set up from any fund. The choice of the fund depends on your investment goal, time horizon and risk profile.

Retirees usually use SWPs to withdraw monthly income from their funds, so SWPs are typically from debt or hybrid funds. However, they can also be used from equity funds.

To figure out the fund choice that suits you, you’ll need to know your goal, time horizon and risk profile. If you’re unsure, consider balanced advantage funds: these invest in stocks and bonds. However, they’re NOT risk-free, so make sure it is aligned with your risk profile.

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