Start with your time horizon

Money needed within a year or two should generally sit in lower-risk options (money market funds, fixed deposits). Money you won't touch for 5+ years can typically absorb more short-term volatility in pursuit of higher growth.

Be honest about your comfort with losses

If a 15–20% temporary drop in value would cause you to panic-sell, a heavily equity-weighted fund may not be right for you, even if your time horizon is long — because you might abandon the plan at the worst time.

Read the fund's stated objective

Every fund publishes an investment objective and risk classification. Money market funds are typically labelled low risk; balanced and equity funds are typically labelled moderate to high risk. Match this to your own goals rather than chasing whichever fund had the best recent return.

Diversify across funds if unsure

You don't have to pick just one — splitting an investment across a money market fund and a balanced or bond fund can moderate overall risk while still capturing some growth potential.

Revisit periodically

Your risk tolerance and goals can change over time (e.g. approaching retirement). It's worth reviewing your fund choices periodically rather than choosing once and never revisiting.