How my principal should be protected in mutual fund

Please note that if your prime investment objective is protection of investment capital, then we would suggest you not to invest in mutual funds. More so, because you have already invested the money in fixed deposits and you now want to invest in mutual funds but cannot sustain dip in principal investment amount.

Please also note that in place of fixed deposits you can invest in debt mutual funds as these are tax efficient and highly liquid. However, even debt funds can be volatile some time and therefore, you will have to be very patient and ready to take some amount of risk. Please see how debt funds are efficient over fixed deposits https://www.advisorkhoj.com/mutual-funds-research/fixed-deposit-vs-debt-funds...

Therefore, we suggest that shifting from FD to debt funds - even though a good option - you should go for it only if you can sustain some amount of risk.

Wishing you the best