How to Achieve Life Goals With 4 Different Types of Mutual Funds?

Investing your money helps in accelerating your financial growth faster as compared to saving and storing it. Over the years, mutual funds have come up as an excellent investment option for building long-term wealth. While one can always plan about what to do with their finances, having a designated financial instrument working for unique goals can be a lot better.Mutual funds offer goal-centric funds in quickly achieving crucial life goals. You can invest your finances in different types of mutual funds that are targeted at realising unique goals. Let's take a look:

• These funds are open-ended schemes which means that they can be re-subscribed after continuous periods.
• Here the fund capital is invested in fixed income or debt securities that come with high liquidity and less risk.
• Liquid funds have a maturity period of up to 91 days, ensuring that you do not have to pay high penalties on withdrawal of funds.

• 'Equity-linked savings scheme (ELSS)' is a mutual fund category that comes with tax exemption under section 80C , allowing you to reduce your taxable income by up to Rs 1,50,000 in a financial year.
• Apart from it, ELSS offers much better rates when compared to other investment options like 'Fixed Deposit (FD)' and 'National Savings Certificate (NSC)'.
• ELSS comes with a lock-in period of just 3 years which is the least compared to other options under section 80C. You, therefore, get quicker freedom to invest in the way you like.

• You can invest in balanced fund s that will give you the required security on your capital as well as good interest rates to build a significant corpus.
• The prices of gold might not be as volatile when compared to equity, but when held for the long-term, it offers you substantial capital. You can opt for a gold fund if you believe in the financial capacity of tangible securities.
• An index fund is another popular fund type that you can opt for. These funds are passive funds that are known for capital security and relatively little risk.

• You can invest in ' Systematic Investment Plan (SIP)' schemes that take a portion of your income periodically and build a significant corpus using the power of compounding.For example, if you invest Rs 10,000 per month in a SIP that offers an 8% return for 10 years, then you get nearly 6 lakhs rupees as a return by investing 12 lakhs. This brings the amount in-hand to 18 lakhs.
• If you have a good risk appetite, what better way to grow your wealth than equity funds? You can expect significant return rates like 15-18% on your investment.

1. Mutual fund for Building an Emergency Buffer One aspect that is most certain about life is how uncertain it is. Whether it is a medical emergency or an urgent house repair, requirements of satisfactory financial backing always accompany emergencies. Therefore, it is necessary to build up an emergency buffer, or emergency fund as some call it, that you can quickly access in such trying times. Liquid funds are a type of mutual funds that are targeted to offer you quick cash as per your requirement.
2. Liquid funds are popular for their smooth redemption process and as a safe way to build emergency funds.
3. Mutual fund for Tax Benefits Let's be honest, who does not love a tax benefit? ELSS funds offer you a method to optimally plan your finances in such a way that you can reduce tax liability on your income.Here’s how.
4. Mutual Fund for your Child's Education As parents, it is our utmost duty to offer the best education available to our children. In the time of sky-rocketing price of education, start investing from an early period to build a significant corpus for your children's education. Here you have multiple mutual funds options to choose from:
5. Building up a corpus for children's education is a long-term goal. Investing in such funds from an early age ensures that you do not have to compromise on the quality of your child's education when they grow up. Consider starting a SIP in the fund of your choice based on your risk appetite and financial goal.
6. Mutual Fund for Retirement It is important to plan your retirement if you wish to enjoy a financially secure future. Here you need to build a significant fund that can support you for the long term once you retire. Financial experts often advise you to diversify your investment into multiple financial avenues available.

It is important to thoroughly understand the kind of mutual fund that you opt for. If you are looking forward to building finances for your children's education, search and evaluate multiple mutual funds that offer the same services. Make sure that the parameters of any mutual fund are aligned with your goals and risk profile.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.