How to Choose the Right Mutual Funds for Your SIP Investment

Investors can really benefit from their mutual funds when they choose liquidity, professional management, and diversification. Investors can mitigate market volatility, concentration risks, and liquidity risks by diversifying their funds into schemes like the SBI Small Cap Fund. When investors diversify their funds across portfolios and match their risk appetite and goals, they can easily achieve an investment solution that is easy to use. They can even use a SIP return calculator to make smarter decisions. 

In addition to giving you much higher returns, mutual funds offer a lot of diversification across various asset classes. When investing in mutual funds, you take on a certain amount of risk – as with all investments. You need to watch risk management and industry pitfalls with a SIP return calculator to make sound investment decisions. 

Market risk

Market risk is one of the more critical risk factors associated with mutual funds. The overall value of mutual funds can decline if there is a lot of market volatility. Other factors that impact mutual funds include economic conditions, interest rates, geopolitical risks, and global events.   

Liquidation risk

It might not always be possible to sell your mutual fund when needed. The value of a mutual fund can fluctuate because its performance is linked to market conditions. When selling your mutual fund at a loss during a downturn, you are left with a reduced return on investment. SBI Small Cap Fund is liquid, so you can access them. 

Credit risk

Credit risks can be mitigated when one diversifies their funds and chooses high-quality securities in the mutual funds they choose from. 

Interest rate risk

A mutual fund investment can lose value if interest rates change, which is what is called the interest rate risk. The risk of interest rate fluctuations is greater for bond mutual fund schemes than for equity mutual fund schemes. Interest rates rise, which decreases the value of fixed-income securities. Mutual fund schemes with diversified portfolios and investments across various asset classes can mitigate interest rate risk.

Risk of inflation

The inflation risk is the risk of your investments losing value because of inflation. The actual rate of return from low-return mutual funds may be lower due to inflation. A diversified portfolio and higher returns are essential in mitigating inflation risk.

Risk manager

You might lose money investing in mutual funds due to manager risk, which means the fund manager may perform poorly. Mutual fund schemes with poor managers are more likely to fail to achieve their investment objectives, lowering investment returns. Look for an investment fund scheme with an established track record of performance and is managed by an experienced and knowledgeable fund manager to choose an investment fund scheme with proven results.

Invest with Bajaj Finserv

Investment plans offered by mutual funds are not only lucrative but also risky. A wide array of mutual fund investment options are available through Bajaj Finserv’s investment solutions. Investing in mutual funds is more straightforward with our easy-to-use online platform, a wide selection of mutual funds, and dedicated customer service.


There are a variety of risks associated with mutual fund investment plans, including market risk, liquidity risk, credit risk, interest rate risk, inflation risk, and manager risk. To make better investment decisions, you must be aware of the risks and ways to mitigate them. You can start by choosing schemes matching your risk appetite and investment goals and diversifying your portfolio. Keeping your mutual fund’s goals aligned with your financial goals requires frequent reviews and adjustments. 

Investing in good mutual funds schemes is easier when you invest with Bajaj Finserv. We have made it easier for investors by giving them an online platform where they can select funds. They Can get advice from customer service on tools like the SIP return calculator and expert advice to make things easier. Mutual funds do come with certain risks, but they also offer lucrative returns. 

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