How do I invest in mutual funds, diversify investment portfolio?

livemint.com:

—Name withheld on request Your investment pattern shows low appetite for risks, whereas you have a long time to build a portfolio for your goals. It is important to align the investment avenues with the time horizon of your goals or you will not be making the most from your investments. For example, if you plan to invest ₹30,000 every month for the next 14 years in PPF for your daughter’s education and if this investment grows by 7.5% per annum (p.a.), you will be able to accumulate a corpus of ₹88 lakh.

However, if you invest the same amount in equity mutual funds, you will be able to accumulate ₹1.05 crore if the investment grows at an average of 10% p.a., or even ₹1.22 crore if it grows by an average of 12% p.a. Hence, aligning the time horizon of goals and investment avenues matters a lot in financial planning. While this is about the return potential, it is equally important to look at the potential risk too.

When you invest in equity mutual funds, the money is invested in the stock market which does carry risk. But, one of the biggest advantages of mutual funds is that they are managed by experienced and professional fund managers. They also diversify their portfolio across different companies and sectors to reduce the risk.

Another important point on stock market investing is that the possibility of making negative returns or losing capital is nearly zero when you stay invested for more than five years. The shorter the time horizon, the higher the risk, hence stock market investing is always for the long term. Looking at your goals, they are all long-term in nature and you both should certainly consider investing in equity mutual funds.