According to your risk appetite select a debt or equity fund

First, begin by studying your risk appetite. If you have a penchant for risk, the advice would be to go in for a equity dedicated funds. These funds park bulk of the corpus into equities, which means you can end up with poor returns or superlative returns.

Those with a lesser risk appetite could look at debt dedicated schemes which park their money in government securities or corporate debt. These debt dedicated schemes almost always offer you steady returns.

If you want monthly income, it's best to go with monthly income plans that invest maximum of their total corpus in debt instruments.

Choose the mutual fund

Study the various mutual funds and go along with those that have a good track record.

Study the track record of the fund manager

There are some fund managers that have been managing the scheme since long and have a proven track record. If you have doubts do some research and get more information

Study the portfolio of a scheme

It is also good to study the portfolio of a scheme. If you find that the portfolio has stocks that are laggards and are unlikely to move up because of the dismal nature of the industry, avoid the scheme.

Do not pay a high NAV

If you feel that the stocks in the portfolio have already appreciated and you are paying a high net asset value (NAV), avoid the scheme. The NAV may have peaked and you could be buying into a scheme at the highest NAV.

Check the past performance

Though, past performance is no indication of future performance, it will more or less allows you to get a broad indication of the scheme.

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