If you want to optimise your returns without taking undue risks while investing then you must follow these important tips. Never put all your eggs in one basket. Allocate some funds for short term and some for long term needs. The best way for most people is to invest in mutual funds. The investment period varies from 1 day to several years. But the thumb rule is to know your targets while investing. Here we answer questions of Zee Business TV viewers: 

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A caller, who is looking to invest in mutual funds in pharma sector, wants to know if he can invest in Nippon India Pharma Fund for short duration.  

The advice to him is that the investors should not expect very high returns in the pharma sector in near term. This sector has seen a 50 per cent growth in returns in the last one year. 

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The right strategy to invest in sectoral funds is to know the entry and exit time as this is an important factor in such funds. The retail investors should stay away from sectoral funds. For diversification, invest in multi-cap funds.  

Another caller who is 35 years old wants to remain invested for next 25 years. He has invested in Mutual Funds over a year ago. He wants to know what will be the impact on compounding benefits if he withdraws investments from a fund which has been giving negative returns. 

The advice to him is that the benefit of compounding can be availed only on long term investments. Compounding benefits can be availed even on switching the funds. 

For fixed incomes, investors may opt for small saving schemes like PPF, FD, EPF. In case the investor is not averse to risks, he can choose equity asset class. 

If you want to create an emergency fund, then you can put it in 12-month emergency fund, FD or liquid fund. There is almost negligible risk in liquid funds.