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Mutual funds – a popular investment option
Mutual funds are popular financial instruments among investors these days. As the disclaimer says, there are risks involved with mutual funds investments. However, it comes with a lot of benefits, including significant growth in the amount one invests. Some additional benefits include convenience, options to invest smaller amounts in a systematic manner, professional guidance, tax exemptions under Section 80C, and many more. This is why more and more people are opting for mutual funds as a lucrative investment option.
Types of mutual funds
There are multiple variations of mutual funds. Based on the asset class, there are three types of mutual funds – Debt funds, equity funds, and hybrid funds. If you want to choose Mutual funds classified by investment objective, there are four options. Growth funds, income funds, liquid funds, and tax-saving funds. Growth funds and tax-saving funds are the two most popular mutual funds as they match the investment objectives of most people.
A brief guide to starting with your investment journey
Here are a few useful insights for first-time investors:
- Detailed research on the current market trends and drivers will help in understanding the basics of investment. Play safe, and don’t go for a huge investment on the first go. SIPs allow you to invest a small amount of money periodically instead of a lump sum investment. Choose from multiple plans based on your convenience and goal.
- Take advice from experts. In most cases, the investor will be guided by a specialized fund manager who will guide him through the investment procedure. Several free or paid courses are available online that can provide valuable tips about mutual fund investments. This will protect your money against market fluctuations and potential losses.
- Before the investment, make use of the mutual fund returns calculator. A mutual fund returns calculator gives you a precise idea about the return amount on your investment. This is undoubtedly the best way to gauge the potential of your investment and reach your monetary goals. You can make your financial plans based on this calculation.
- Diversify your portfolio and choose the assets that ensure steady returns in the long term and are less affected by economic factors like inflation. There are several indices like the S&P BSE 100, NIFTY 50, and the index funds allow one to invest in the top 100 or 50 trading in the stock market.
Inflation Calculator – How it works?
Inflation is one of the important factors that impact an individual’s financial growth. It depends on various socio-economic as well as political aspects. An inflation calculator is an important tool for mutual fund investors. This is like determining the depreciated value of a property as the valuation of the asset decreases over time due to multiple factors. The inflation calculator analyses the value of the invested money after a certain time, considering the historical rates. This helps to determine the effect of inflation on the buying capacity of an individual in the future. It is important to consider the key factors that might impact the performance of the funds in the long term. This will give a fair estimate of the potential gain that will help reach one’s financial goals.
Benefits of using an MF calculator and an Inflation Calculator
Some of the advantages of using the MF returns calculator and the Inflation Calculator are given below:
- The output from the calculators is precise and reliable. There is no risk of facing human errors in calculating the output.
- These tools are user-friendly. One just needs to enter the amount they want to invest, and the MF returns calculator will show the actual returns after a certain period. On the other hand, the output from the Inflation calculator will help to predict the actual worth of the current investment after a specific time.
- It saves your time as no manual calculations are needed.
- These calculators are free of cost and are easily available online.
Conclusion- Invest wisely and evade risks.
To summarise, the prime focus for a mutual fund investor should not only be limited to saving tax but to building wealth over time. Simultaneously, one must also secure his hard-earned money from possible market risks. He must know there are no guaranteed returns, and the investment must be aligned with his risk-bearing capacity.
Stock market experts or financial advisors can help first-time investors to a great extent. They can guide one in choosing the right funds when one is confused with the various available options. They can also help in providing valuable suggestions for diversifying the fund portfolio. This will ensure the best returns and minimize the exposure to financial losses. So, don’t hesitate to seek expert advice at the right time.
