How to Achieve Your Financial Goals with Mutual Funds

Buying a house, getting your hands on an expensive new car, retirement planning, arranging funds for your children’s education – in all probability, you too have a financial goals list like this. Some of these are short-term, while others are long-term goals. 

You cannot achieve these only by saving money. Investment instruments that help you grow your wealth are the most profitable way to accomplish your goals faster without stressing your finances too much. Mutual fund investment is one of the best ways to do this. 

Mutual funds are of different types and help you fulfil separate objectives. A careful selection of mutual funds in your portfolio will ensure diversification and a well-thought-out strategy to meet your goals.

Why Mutual Funds?

Several investors find the stock market to be a lucrative investment option. However, it requires commitment and time to watch the regular movement of the market. Mutual funds allow you to invest in equities without having to do that. As they are managed by experts who have years of experience, you can trust them. Moreover, there are several categories of mutual funds that can help you achieve different goals. They also cater to different investors who have varying risk appetites. 

You can either invest a lump sum in mutual funds or follow the Systematic Investment Plan (SIP) to adopt a regulated and disciplined investing method. A mutual funds calculation can also help you select the appropriate one for your needs.

How Can I Utilize Different Mutual Funds for My Financial Goals? 

Retirement Planning

Ideally, you must start planning your retirement life as early as your 20s or 30s. It is when you have fewer responsibilities and thus have more disposable income. For this purpose, equity funds are your best bet as they give the best returns over a long time. To diversify your portfolio, you can consider thematic or sectoral funds if you are bullish on a particular sector. 

Apart from this, you can consider small-cap, mid-cap, and large-cap funds. Large-cap mutual fund investments are ideal if you have a low risk tolerance. Mid-cap, on the other hand, is advisable for aggressive investors. They help to earn higher margins in the long run.

Children’s Education or Marriage

For most Indians, this is a sacred fund as parents want to do the best for their kids. For this purpose, you can consider balanced funds that invest your money in both debt and equities. As the exposure to equities is lesser, balanced funds are safer. If you start early, you can earn significant returns and arrange funds for your child.

Tax Planning

The Income Tax Act allows professionals to reduce their taxable income as per Section 80C. If your main objective is tax planning, you can consider ELSS mutual funds. These are diversified funds that invest your money in equity funds. However, they have a lock-in period of three years. It means you cannot withdraw your investment before this time. 

Regular Income

It is a significant goal for salaried professionals who have no source of income after retirement. These are Monthly Income Plans (MIPs) designed to give pay-outs in the form of dividends. These funds allocate 80% of your investment in debt funds and the rest to equity funds. 

Short-term Goals

For your short-term goals, it is advisable to invest in debt funds. Equity funds are volatile and may deplete your investment in the short term. 

To Wrap up Mutual funds offer a wide range of options to help investors fulfil their financial goals. With careful planning and knowledge of different mutual funds, you can plan your portfolio to achieve yours. For more information, you can visit PGIM Mutual Fund.

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