Invest Smart: How to choose a mutual fund - all you need to know

Choosing which mutual fund to invest in can often be confusing. With multiple fundhouses and various schemes, there are a host of factors that an investor needs to take into account before deciding which fund to opt for.

Founder & CEO of Credence Wealth Advisors, Kirtan Shah says, it is crucial to assess your risk appetite and choose a fund based on your asset allocation. It's also important to be disciplined and invest for the long term, especially when it comes to equity investments.

For investments in large cap funds, Shah recommends investing for a minimum of three years. Where as for midcap and small cap funds invest for at least 5 years and 8 years respectively. He also suggests choosing an index fund for one's large cap allocation and opting for actively managed funds for one's mid and small cap fund allocations.

Shah also explains the risks of over-diversification or investing in too many similar kinds of funds. This can be more detrimental than beneficial to one's portfolio.