What is a Mutual Fund?
A mutual fund is a pool of money formed by multiple investors who are looking to invest in various securities such as stock, bonds, etc . These funds are operated by professional fund managers who invest the funds capital and attempt to produce capital gains and are registered with the Securities and Exchange Board of India (SEBI).
Why should I invest in Mutual Funds?
As an investor we aim to get maximum returns on our investments to reach our desired goal. But one may lack the time to track the market and knowledge to choose suitable investment option. With various types of Mutual funds available one can invest in a Mutual fund that suits his/her objective and risk appetite.
The ease of SIP
Dreams can only be achieved if you work towards them. Even building wealth is no different. A Systematic Investment Plan (SIP) helps you do just that. SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme. SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. The biggest advantage of SIP is that one need not time the market. Rather than timing the market, investing every month will ensure that one is invested at the high and the low, and make the best out of an opportunity that could be tough to predict in advance.
Benefits of investing with SIP:
- Disciplined approach to investments
- No need to time the market
- Harness the power of two powerful Investment strategies:
- Rupee Cost Averaging – Benefit from Volatility
- Power of Compounding – Small investments create Big Kitty over time
- Lighter on the wallet
- Reap benefits of starting early
Plan for your goal:
We are all different. The way we look, the things we want, our age, objectives and risk appetite, everything is different. We all need different approaches for wealth creation too.Investors can opt for mutual funds to attain all such needs across different life stages. For instance, investors with higher risk appetite and long-term goals can look into equity mutual funds for better wealth creation. Similarly, for short- to medium-term goals, there are mutual funds ranging from liquid funds (an alternative to savings account) to debt mutual funds and hybrid mutual funds. Further, debt mutual funds are also tax-efficient than fixed deposits, due to indexation (adjusting returns for inflation).
Investing in mutual funds offer investors a variety of benefits such as liquidity, professional management, a tax benefit and diversification. Parents can choose according to the risk they are willing to take, return expectations, and other prospects. Parents looking for a long term investment can opt for pure equity mutual fund categories that generate high returns in the long term despite risks of short-term volatility. Those looking at the lower spectrum of investment can opt for hybrid funds such as equity and debt while shorter investment horizons can opt for debt mutual funds.
Retirement is as certain as any other fact of life. You, therefore, must be ready for it: mentally, physically and of course financially. In fact, there is a strong case for you to start preparing now, right now. So whether you are in the age group of 30 or 50: retirement planning is equally important to each one of you. You can plan your retirement kitty with Equity mutual funds, Balanced funds or Monthly Income Plans(MIPs) depending upon your risk profile .