Using mutual funds to invest in goals

Every individual has some goals in life. Assuming the person is 35 years old, these goals could be a holiday abroad within a year, funding the children’s higher education, buying a house within the next decade or simply planning for the future. retirement which is 25 years away. Therefore, goals that are less than three years away can be called short-term goals, while those with a horizon of five years or more are considered long-term goals.

The first step is to identify the goals for which you need to start investing. Once this is done, you need to work to find the current cost of the goal. To that value, you add a reasonable amount of inflationwhich will give you an idea of ​​the cost in the year you want to achieve it. Once this is done, identify an asset class or a combination of asset classes necessary to achieve the goal. This process can be done individually or with the help of a financial advisorNow, work backwards and calculate the amount you could save through a systematic investment plan (SIP), a lump sum, or a combination of both to achieve the goal.

Mutual Funds There are schemes across all asset classes and all time frames in which you can invest to achieve your goals. For example, if you are planning a holiday abroad in two years time that will cost you Rs 500,000, you could use a combination of debt and equity funds. equity savings funds to achieve that goal. Since it is a short-term goal and the time frame is less than three years, investment advisors would suggest a very small capital allocation in an equity company. savings fundOnce you have done the math, you can decide whether to make a one-time investment or stagger your money. Similarly, for retirement, which is 20 years away, you could use a mix of equity mutual fund schemes. For your 5-year-old son who needs money for higher education on turning 18, a ₹10,000 monthly equity investment for 12 years in an equity fund with a 12% return could accumulate to ₹32.2 lakh.