Mutual Funds To Meet Financial Planning Goals

Mutual Funds To Meet Financial Planning Goals

All investors have certain aspirations and needs which frame their financial goals. These goals are unique to them and their financial requirements. These goals can be anything – perhaps you want to buy a new phone, or fund a vacation, or send your child to a prestige college or university, or buy a home or a car, or even plan for your retirement. An investor often has a mix of short-term goals, mid-term goals, and long-term goals. However, you do not have to invest in traditional investment options to achieve these goals. Mutual funds can be a great choice for retail investors who wish to achieve their financial goals – be it short-term or long-term.

Irrespective of you having a short-term goal or a long-term goal, you being an aggressive investor or a conservative investor, there are different types of mutual funds that cater to varying needs of investor. Choosing the right type of investment is necessary to achieve for your goals.

Types of Mutual Funds

Let’s quickly recall the different types of mutual funds that an investor can choose to invest in. There are broadly three types of mutual funds, they are:

  • Debt mutual funds
  • Balanced funds or hybrid mutual funds
  • Equity mutual funds

Let us understand some common type of goals that are most suited for particular type of mutual funds.

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Financial goal Investment horizon Most suited type of mutual fund
Tax planning Medium to long term ELSS tax saving mutual funds
Regular payouts Short to medium term SWP (systematic withdrawal plans) in mutual fund schemes
Child’s education or marriage long-term Equity mutual funds, gold funds, balanced funds, index funds
Retirement Long-term Equity funds, SCSS (senior citizens savings scheme), bank fixed deposits (FD), (POMIS) post office monthly income scheme
Saving for any short-term goal such as buying a car or planning an overseas trip, or saving for home repair or home renovation Short-term Short-duration bonds, short-term debt funds, liquid funds

Why Are Mutual Funds the Ideal Investment Option to Achieve Your Financial Planning Goals?

Mutual funds are one of the best alternate investment options that can help investors to create a diversified portfolio. These investment vehicles can be used to achieve all types of goals – whether short-term or long-term. However, one should ensure that they do not over allocate or under allocate their investments in any particular type of asset class. Your mutual fund investments must align with your financial goals, risk appetite, and investment horizon.

All in all, an investor is offered with different type of mutual funds with unique features that can cater to a particular type of goal. If you are wondering how to invest in mutual funds, you can either do it in a systematic and regular manner through SIP (systematic investment plans) or through lumpsum investment. Investing in mutual funds via SIP can help to instill financial and investment discipline among investors which is needed to attain your goals.

So, what are you waiting for? Invest in mutual funds today to meet your financial goals. Happy investing!