Mutual Funds to meet Financial Planning Goals

Everyone has financial goals that are unique to them and their financial needs. You may want to own a home, a bigger car or fund your child's education or have a financially protected retirement. Your goals may be a mix of short-term, mid-term and long-term goals. These goals, in turn, determine the amount of savings you need to create and how you need to invest to attain the desired goal amount.

Moreover, with everything becoming more expensive, investment in traditional instruments might not live upto your expectations. This is where investments in mutual funds can be beneficial. Whatever your goals might be, there are mutual funds to help meet them. The mutual fund basket has something for everyone whether you are a conservative or aggressive investor, have a short-term and long-term goal and have a small or large amount to invest. You can use different kinds of mutual funds with different investment objectives to reach your goals.

Choosing the right mutual fund, hence, becomes the first important step in achieving your financial goal.

Let us look at some common goals and the most suited mutual fund options to invest in for these goals.

Common Goals	Most suited mutual fund scheme category	Investment Horizon
Retirement	Equity diversified mutual funds, sector or thematic funds	Long-term
Tax planning	Equity Linked Savings Scheme	Medium
Child's education and marriage	Balanced funds, index funds, gold funds	Long-term
Saving for an overseas holiday, buying a car next year or saving for home renovation in one or two years	Short-term gilt funds, short- to medium-term debt funds	Short-term
Regular payouts	SWP in Mutual Fund schemes	Medium to short-term

 

Why mutual funds are ideal to achieve financial goals

You can use mutual funds to create a diversified investment portfolio that meets your long-term and short-term financial needs. However, one should ensure that there is sufficient diversification or spread of investments across the chosen mutual fund schemes. You should also take into account the risks and avoid under or over allocation in a particular asset class.

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.

All in all, you have a variety of mutual funds to choose from, each with a different investment objective. Further, you can leverage mutual fund investments to instil financial discipline and meet your financial aspirations in a structured and timely manner.

 

 

The information contained in this document is for general purposes only and not an investment advice. Readers should seek professional advice before taking any investment related decisions.

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