Investment: How to invest in mutual funds according to your financial goals, what is the right way..

For the last few years, the confidence of domestic investors has increased in the Indian market, due to which people are continuously doing SIP through mutual funds. There are many options for investment in mutual funds, such as equity, debt, gold and hybrid. But the option of equity has been very attractive for investors, where they expect higher returns. By the way, equity funds are riskier than other funds. Therefore, investors can choose the right mutual fund, keeping in mind their financial situation and age, so that their financial goals can be met. Importance of financial goals. Our life cannot move forward without money. We can fulfill our personal and professional needs only when we have a certain income. But we have short-term and long-term expenses, such as children's education, marriage, buying a car or house, vacation, retirement plan, etc. To meet these expenses, it is necessary to have a better financial goal. Because if investment is done keeping the goal in mind, then discipline comes in behavior, and the investment journey becomes simple. Therefore, investment decisions should always be based on the time frame and objective of these goals.

What are the main factors when choosing a mutual fund?

Time Horizon: Investment does not mean that you put money today and after a few days you feel like taking it out. Here, discipline is an important quality that investors should have. You have to decide how long the money you are investing in the mutual fund is. It can be short-term, medium-term, and long-term. If the time period is decided at the beginning, it helps in achieving financial goals.

Risk Appetite: When an investor chooses a mutual fund, he looks at his risk appetite, i.e., his ability to take risk. It is generally believed that a young person takes more risks, and as age increases, the ability to take risks starts decreasing. Therefore, you can choose a mutual fund based on your age and income.

On the selection of mutual funds, Mahesh Kumar, Managing Director, Anant Associates, says, “When we choose a fund, we see its track record in the short and long term, how much return the fund has given in the market, whether the fund is underperforming or outperforming. We choose the fund only after getting complete information about it.

Asset Allocation: If you want to make a safe investment, then you will go towards diversification. On the other hand, if you want to take a risk, then you will prefer to invest in equity. Nowadays, investors are taking full advantage of such mutual funds, where there is a balance of equity, debt and gold, and the risk is low.

Track record of the fund: The selection of the right mutual fund is hidden in its history. We see how that particular fund has performed in the last 5 and 10 years. Has it given returns for a long time? Investors should choose a mutual fund by looking at the returns over a long period of time. Also, it should be seen that the fund has shown stability in its category.

Mutual Funds Based on Goals and Duration Types of Funds

Short-term goals: Our financial goals are for different time periods. If you have set a short-term goal, which is less than 3 years and includes foreign travel, buying a car, or an emergency fund, then to fulfill these goals, you can take debt funds, liquid funds, or low-equity funds.

Medium-term goals: Children's education, home renovation, treatment, etc., are some of the expenses that the middle class definitely faces. These can be seen as medium-term goals, whose time period is between 3 to 5 years. A balanced combination of stability and growth potential is seen in it. For this, you can choose large-cap equity funds or flexi-cap funds which provide you with moderate growth with low risk.

Long-term goals: If you are planning to invest for the long term i.e. 7 to 15 years, then you are expected to be disciplined. You have planned to invest for retirement or children You have planned for your child's marriage and are looking for better returns. SIP (Systematic Investment Plan) can help you in this, where huge returns can be earned by investing money in mid-cap and small-cap funds. This is an equity-heavy portfolio. However, to meet long-term goals, you can consider other mutual fund options.

If your goal is specific, then you can choose the fund accordingly. Like child education fund for children's education, which is a solution-oriented fund. Retirement fund for retirement. If you are investing for a long time in retirement plan, then you can go for equity-heavy. At the same time, hybrid or debt will be right for short term.

Investment strategies
Investment strategies help in meeting our investment goals. These strategies can be different for each person according to their investment. Like for new investors, SIP is better than lump sum. In this, they can start their investment journey with less money. Similarly, when the market corrects itself, you must have funds for investment at that time.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.