10 Type Of Funds For Every Financial Goal

 Diwali is not only a festival of light. It is also considered to be an auspicious festival to make investments. It is believed that investments made in Diwali multiply many folds. For those who believe slow and steady wins the race, mutual funds are an ideal option.

Mutual funds come in various shapes and sizes. You can invest in them according to your financial goal. Here is the list of funds that can not only help you reach your financial goals but also help you to build wealth. 

1] Liquid Fund: If you are the one who loves to see your savings account grow, then Liquid Fund is for you. It is ideal for parking short-term money. It generates higher returns than a savings account. You can withdraw the funds at any time. If the opportunity arises, you can even shift your investments into equity.

2] Debt Fund: Whatever your investment preference. Debt should be a part of your portfolio. It provides stability and cushion against volatility. For those who hold it for 3 years, their returns qualify as a long-term capital gain with indexation benefit.

3] Aggressive Hybrid Funds: Hybrid funds as the name suggests invest in equity and debt. It is a perfect combination of safety and growth. More importantly, since it qualifies for equity taxation, it is ideal for new investors.

4] Equity Savings Funds: Again a Hybrid Scheme, but more inclined towards debt. These funds generally invest in Equity, Debt, and Arbitrage opportunities. Since these funds have low equity exposure, even senior citizens can consider these funds with a 1 or 2 years time horizon.

5] Large Cap Funds (Equities) - If you want to invest in equity and want your money to grow steadily, these are your best bet. Large Cap Funds witness less volatility than their Midcap or Small Cap peers. These are your best bet for long-term goals.

6] Mid Cap Funds (Equities) - These are a bit riskier than their Large Cap peers but have the potential to deliver above-average returns. These funds invest in growth companies whose potential is untapped. If you want to invest in funding your child’s education or paying the down-payment for a house, then these funds are your best bet.

7] Small Cap Funds - If taking risks is your style, then look no further. These funds are highly volatile and can deliver extraordinary returns in the long run. These are not for the faint-hearted and hence investors must have very limited exposure to these funds. Even if you love taking a risk, invest in these funds only if you have a long-term time horizon.

8] Equity Multi-cap: If you want the flavor of Largecap, Midcap, and Smallcap, then Multi-cap funds are your best bet. Consider this, a Midcap fund might be forced to invest in Midcap stocks even if the market is not performing well. Multi-cap funds have more flexibility here. These funds are long-term wealth creators.

9] International Funds: If you have always wanted to own blue-chip stocks like Amazon, Facebook, Netflix or Apple, but couldn’t because of geographical hurdles, International funds are for you. Not only do they offer portfolio diversification, but also shield from local volatility.

10] ELSS Funds: A must in your portfolio. These funds are ideal for availing benefits under Section 80C of the Income Tax Act 1961.  They have the lowest lock-in period in tax-saving instruments. In the long term, they can deliver above-average returns.

The Mutual Fund universe is vast. It is always advisable to seek the guidance of a qualified financial planner before making investment decisions.