May 28, 2020
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Finance

MUTUAL FUNDS TO MEET FINANCIAL PLANNING GOALS

Everyone has goals in their life to achieve which are unique to them as individuals. You may want to own a big car, or buy a new house, or experience a world trip, or provide for your child’s education, or create enough corpus for a comfortable retirement. Your goals can be a blend of short-term, mid-term and long-term goals. These goals act as the foundation in determining the amount needed to invest to accomplish your desired goals.

With everything becoming so expensive over time, investment in traditional instruments might not live up to your expectation. This is when mutual funds come into the picture. Investing in mutual funds is one of the best ways to achieve financial goals. Whatever may be your financial goals, there are different types of mutual funds to help meet them. Different kinds of mutual funds have varying investment objective that helps to meet a specific goal.  Hence, choosing the right mutual fund investment for your portfolio is crucial. Let us look at some common goals and the most suited mutual fund schemes to achieve these goals.

Common goals Investment horizon Most suitable mutual fund scheme category
Child’s higher education and marriage Long-term Index funds, balanced funds, gold funds
Tax planning Medium-term Equity Linked Savings Scheme (ELSS )
Regular payouts Short-term to medium-term SWP (Systematic Withdrawal Plan) in mutual fund schemes
Buying a new car, saving for an overseas trip, or saving for home renovation in 1-2 years Short-term Short to medium term debt funds, short-term gilt funds
Saving for retirement Long-term Equity mutual funds, thematic or sector funds

How are mutual funds ideal investment avenue to meet your financial goals?

You can invest in mutual funds online to create a diversified portfolio that aids you to meet your short-term and long-term financial needs. However, always ensure that there is sufficient diversification of funds or spread of investments across the chosen mutual fund investment. Also take into account the risks associated with investing in those funds and avoid over or under allocation in a particular asset class like equity fund, debt fund, etc.

Mutual funds also offer asset allocation funds that can mirror your life-stage and progressively reduce the exposure to volatile assets and move to more stable options as you grow old. These funds are a good option if you want to leave the rebalancing of your asset allocation to the fund manager.

Also, you can leverage mutual fund investments to impart investment discipline and meet your financial goals and aspirations in a timely and structured manner. Ensure that your investments are in align with your investment goals and tenure and risk profile. Do not shy to take advice from a mutual fund expert, if the need arise. These advisors have in-depth knowledge and expertise associated with the volatilities of the market. Happy investing!