For goals, which are around five years away, balanced mutual funds can be the answer. Similarly, for goals that are 1-3 years away, debt funds should be the ideal parking slot. For your needs that are less than a year, shorter-term and liquid funds should be your investment vehicles.
Here are a few important points to keep note of while investing in mutual fund schemes:
Never ignore the objective of the scheme
Investing in a specific MF scheme without knowing the scheme’s objective is like boarding a train without any goal in mind. Every fund’s information document including the fact sheet carries the objective of the scheme. Read it to align to your goals. Depending on the objective of the MF scheme, the fund manager invests in the stocks of large-, mid-or small-cap companies, or in a mix of them. Whether the scheme would diversify across industries or be concentrated in one or few specific is also conveyed from the objectives. Each fund, therefore, has its own distinguished objective and risk-reward grid. Understanding what is important to align your financial objectives with that of the funds’ performance is key to generating optimum results.
Building wealth- Little by little
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Esta historia es de la edición November 2020 de Investors India.
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