What percentage of my investments should I put in mutual funds?

What percentage of my investments should I put in mutual funds?

Over the years, mutual funds have emerged as one of the most beneficial investments. Mutual funds allow you to invest as per your risk appetite while giving you the full opportunity to get high returns. Further, the SIP (Systematic Investment Plan) feature gives you the freedom to invest with a smaller amount consistently without burdening your present finances. You start a SIP mutual fund investment of as low as Rs. 500.

But how would you know how much money to invest in mutual funds to achieve your long-term goals? There is no definite answer to this. Each investor has different income, financial needs, long-term goals, etc., and hence, it is not possible to specify an investment percentage.

However, a few factors, such as below, can help you arrive at an optimal amount to invest in mutual funds as per your financial situation.

  • Identify your goals: When considering investing in mutual funds through SIP, identify the investment goal. For instance, are you investing to buy a new phone, car, house? Or do you want to save money to cover your marriage expenses, pay for your child’s education? These financial goals will help you decide how much to invest in mutual funds. Once you know your financial goals, decide the timeline for your goals. Make SMART – Specific, Measurable, Attainable, Realistic, and Time-Bound – goals. For instance, you could want to save Rs. 20 lakhs by 2031 for your child’s education or accumulate a retirement corpus of Rs. 3 crores by 2050. You can classify your financial goals into short-term, mid-term, and long-term goals and make mutual fund investments accordingly.
  • Prioritize your goals: After realistically listing and categorizing your financial goals, prioritize your list. With a limited income stream and continuing financial expenses, it may not be possible to fulfill all your goals together. Hence, know which one is more important than the other. For example, you could prioritize saving for your child’s education first rather than buying a new car.
  • Calculate your investment amount: Once you know the order of your goals and when you want to achieve them, you can easily decide how much you should invest in mutual funds. The first step is to know how much each of your goals would cost in the future. If your child’s education will cost you Rs. 50 lakhs in ten years, then you need to invest a sum in mutual funds that can give you Rs. 50 lakhs or more in ten years. After estimating the value of your goals, assess how much you can save each month and invest via SIP in mutual funds. As per experts, you can apply the 50:30:20 rule to plan your finances. According to this rule, you can spend 50% of your income on essential needs, 30% on wants, and 20% on investments. From the 20% of your income, create an emergency reserve (three times your monthly expenses) and then build a corpus for your financial goals as per your priorities. If you can cut down on your expenditure, you can increase your SIP installments and save more.


Systematic planning and investment in mutual funds can help you achieve your financial goals without burdening your present finances. Nowadays, online investment apps make it easy to find, plan and invest in mutual funds as per your choice. So, download Tata Capital Moneyfy app and start investing online today.

Post Comment