If you are a very conservative investor, you can initiate SIP in a debt fund to save regularly...

You can do an SIP in debt funds for steady gains, but you will be surprised with the opportunity loss you would have made by not investing in a equity fund. With a tenure like 10 years you must consider equity to get at least inflation beating gains.

For instance a 10-year monthly SIP in a well-rated short term debt fund has can give annualised returns at 8.86 per cent, while the same amount invested in a good large cap equity fund can give 15.25 per cent annualised returns.

If you are completely risk averse, you can choose a well rated dynamic bond fund. These funds can invest in all kind of debt instruments with varying maturities, depending on interest rate scenario. Such flexibility helps in uncertain times. These funds adapt themselves to the changing interest rate scenario, thus reducing interest rate risk to some extent.

If you can take even a little risk in equity, consider hybrid or balanced funds, which are less risky than pure large cap funds. A well rated balanced fund has given annualised returns at 11.3 per cent over a 7-year tenure. If you invest in an equity-oriented fund, as you reach close to the goal, systematically transfer your investments to debt to protect the gains from volatility in equity markets. Balanced funds invest a large part of their assets in equity (60-80 per cent) and rest in debt. The debt portion helps in limiting the volatility in returns compared to a pure equity fund. Therefore, these funds provide better downside protection, compared to an equity fund, during market downturn.

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver MutualFunds Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund