To begin with, you should identify your goals, investment horizon to achieve them and your risk profile.

• Long-term goals
• Investment horizon of five years or more
• You have high risk appetite

Now that you are qualified to invest in equity mutual funds, you have to go a little deeper and find out exactly how much risk can you tolerate. In other words, are you a conservative, moderate or an aggress

• If you are moderate investor, you should invest only in large cap and multicap (they are also called diversified equity) schemes.
• If you are an aggressive investor, you can pick up midcap and smallcap schemes. You can also add sectoral scheme if you have sound knowledge about the sectors.