Chapter 4 : How Mutual funds and investment goals related?
Chapter 4 : How Mutual funds and investment goals related?
Now that you know the different types of mutual funds, the question arises: ‘Which is the best mutual fund?’
Well, there is no single or right answer to this question. This is because fund houses design mutual funds to achieve specific financial goals. And as an investor, you need to know which mutual funds can help you achieve your goals in the best way possible.
All your investment goals can be categorized into three broad groups:
Short-term goals (1-3 years): For instance, going on a family vacation in 18 months, buying a car, etc
Medium-term goals (3-5 years): For instance, doing a short term course in digital marketing in 3/4 years
Long-term goals (5 years or more): For instance, buying a house in the next 5-7 years
For any goals upto 12 months, it is better to invest in liquid funds since they are less volatile. Liquid funds can be a good option to create an emergency fund. For goals between 1-3 years, you may want to invest in short term debt funds.
Hybrid funds are more suited for medium-term goals since they have the potential to provide both capital appreciation and stability. For long-term purposes, equity funds are suitable.
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