Everyone wants that extra source of income that will help him fulfill his goals. What source could be better than investment? Investing your hard-earned money will help you create wealth that can fulfill your goals financially.
Although, when it comes to investment, there is a wide variety of financial instruments available in the Indian market. From fixed deposits to bonds, stocks to gold, they all have their benefits and challenges. The right way to invest depends on various factors such as time horizon, the risk appetite of the investor, and returns based on investor’s goals.
However, investing in mutual funds can be considered as the primary investment option as suggested by many financial gurus. You know what they say, ‘mutual funds sahi hai,’ and they might be right in that. It is because a mutual fund is one investment option that is available for everyone. From the wealthiest to corporate employees, they all can invest in them with the help of proper guidance from a financial advisor. The returns on mutual funds depend on how you invest. So, here is how mutual fund investments makes sense for every investor:
For Young Investors
You are young, and you have set your eyes on a goal. You are doing enough hard work to achieve it. But if you invest in mutual funds, you might achieve it sooner. Also, as a young investor, you will have multiple advantages of investing in mutual funds, which are:
Most investors in their 20s don’t have complex financial needs. So, mutual funds become the right choice for them as it easy to research and buy.
You get to choose from various options as mutual funds hold hundreds of other securities, such as bonds and stocks. As a young investor, you can start with just one or two funds and do well.
You only need a minimal amount of money to start buying mutual funds. There are low-cost funds in which you can start investing with Rs 500/- per month. Another thing that you need to invest in mutual funds is that it takes little time and efforts.
Equity-based mutual funds such as bonds and stocks are the best options for young investors.
For Risk-Averse Investors
Investors who look at the risk-factor twice before investing can’t see their hard-earned money go in vain. This is the reason why some of them think mutual funds are risky, which is not entirely true. There are various mutual funds with minimum risks and secure returns. A risk-averse investor will not invest in equities as they are highly risky.
Debt funds are suited for a risk-averse investor who wants to invest in mutual funds. In the form of debt funds, you can invest in governmental bonds, money market funds, to name a few. Ultrashort-term funds and liquid funds are the funds with the lowest risk, whose main aim is to generate optimal returns for a short duration. Thus, an investor who wants to earn good returns with minimal risk should invest in these funds.
For Seasoned investors
If you are seasoned investors, then you already know that ‘mutual funds sahi hai.’ You know where to invest and when to invest and understand how you can earn maximum returns with minimal risk. You can use your experience to your advantage by investing in a mutual fund that gives secure returns. One more advantage is that you can team up with your fund manager to make the right investment decisions. You can also take advice from a financial counselor to get helped in making the right decision.
Investing in mutual funds will help you create wealth, with which you can fulfill your dreams. However, with so many options in the market, it is confusing what to choose and what not. But no worries, there are various reputable financial advisors such as Finedge, that can help you choose what’s best for you.