Multiple choice

One of the most effective ways to invest through mutual funds is to

  1. develop a model portfolio

  2. buy a few units of every mutual fund scheme available

  3. invest all the money in one fund scheme

  4. invest all the money in different schemes of the same fund family

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A model portfolio provides a structured, diversified allocation aligned to your goals and risk profile, far more effective than buying everything (diworsification), concentrating in one fund, or spreading across one fund family's schemes. Model portfolios enforce discipline and diversification.