Mutual Fund Investment: Living in times where inflation is constantly increasing, savings alone are an insufficient means to guarantee financial security in the future. Money sitting in your savings account, even with interest returns, lacks the ability to beat inflation. If left idle, it is still not generating a new source of income for you.
Investing has become increasingly popular amongst youngsters and older generations to get the most out of their money. Investment returns have a two-fold effect; you not only increase your wealth but also generate returns that beat inflation. They are also useful when looking for additional sources of income that can help in asset acquisition, like buying property and automobiles or starting a new business.
But investing is no easy task. Today, there is a broad spectrum of investment opportunities to choose from, like mutual fund investment, stock market investment, derivatives, foreign exchange, and so on. It’s essential to choose wisely and put your money where it has the potential to grow and cater to your financial requirements.
For a very long time, the general trend in India was to invest in real estate, gold, or bank fixed deposits. However, that has changed over the past few years, and new market instruments have taken over. Mutual fund investment has proved to be one of the most popular in India due to factors like high liquidity, accessibility, and low risk.
Mutual fund, known as an investment instrument pools funds from different investors and invests those funds in bonds, equities, gold, government securities, and other assets. This money is pooled by (AMCs), also known as Asset Management Companies, who market all types of mutual funds, manage their investments and allow investor transactions. As these funds are being managed by fund managers, skilled people are required who can analyse and manage investments.
Mutual funds investment has the potential to fulfil a diverse set of investment objectives due to the plethora of options to choose from.
Mutual funds are segregated on the basis of underlying assets, such as equity, gold, debt, and so on. This means that each mutual fund is investing in different types of assets and therefore has a different risk profile.
When choosing the mutual fund that is best for you, take into your account your current and future needs, your risk appetite, and your investment horizon. For example, if you are looking to invest money for your child’s higher education or buy your own house a few years from now, you have the option to invest over a long period of time. Thus, equity mutual fund investment can be a good option for you.
For example, if you want to increase your wealth and increase your retirement fund, investing predominantly in equity mutual funds will be a better alternative than doing investment in debt mutual funds due to their capability in generating higher returns in the long run.
A Systematic Investment Plan is a type of investment strategy to invest fixed amount of money periodically, which can be semi-annually, quarterly, or monthly,. This approach ensures consistency and discipline, so you can reach your financial goals more efficiently.
The best mutual fund investment for those looking for small but assured returns is Debt Mutual Funds. Returns are generated by lending money to the government or other debt instruments.
As the name suggests, equity mutual funds are funds where the investors’ money is pooled and invested in stocks of companies. There are various types of equity mutual funds like large-cap, mid-cap, and small-cap. One can also invest in the sector or industry-specific funds. You have multiple options to choose from depending on your preferences.
If you’re looking to diversify your portfolio without much hassle, hybrid is the best form of mutual fund investment for you. These funds invest in more than one asset class, meaning you can invest in debt and equity through the same fund.
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