Picking the right fund
Match the fund to the investor
Knowing the fund types is half the job. The other half is choosing, and that turns on one habit: fit the fund to the person in front of you.
- 1
Start with the investor, not the fund: their goal, their time horizon, and their comfort with risk.
- 2
A long goal and high risk comfort lean equity; a short goal or low comfort lean debt.
- 3
Never sell last year's top performer as a sure thing. Past returns do not repeat on demand.
- 4
Match, disclose and document. Suitability is the rule, not the pitch.
A 25 year old saving for retirement can ride equity's bumps; a retiree needing monthly income cannot.
A fund is like a shoe. The best one is the one that fits the wearer, not the flashiest on the shelf.
Fit beats flashA 25 year old saving for retirement can wear a bumpy equity fund and run in it for years.
Long goal, high comfort, lean equityA retiree needing income next month would trip in that same shoe. A steadier debt fund fits.
Short goal, low comfort, lean debtThe best fund is the one that fits the investor, not the one with last year's returns.
Practice
🔥 0 streakReal exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.
Scheme selection should start with:
For a short goal or low comfort with risk, lean towards:
Selling last year's top performer as a sure win is:
The guiding rule when recommending a fund is:
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Education for the exam, not financial advice. Answers can be wrong, so confirm figures against the workbook.