On the other hand, bonds are lower-risk, but they offer less promise of long-term gain. Stocks are higher-risk, but they hold a higher potential for long-term gain. In short, keep in mind the risk and reward degree of investments. At the same time, you can still maintain exposure for long-term gain. Diversification and balance of assets: Allocating a portfolio to multiple asset classes, including stocks, bonds, and cash, can help you protect yourself from the extremes of a bear market.This is important because keeping costs low is a central aspect of producing higher returns, especially in the long run. Low expenses: When choosing the best funds to buy, no matter how long the holding period, it's smart to choose among the best low-cost, “no-load” funds, sold without a commission or sales charge.Best Large Cap Mutual Funds - Ideal for a low risk appetite. To help you make a sound financial choice, we have specified each mutual fund on the basis of its category and performance. They bring about a diversification of risk and balance out market volatility. These funds have investments in both, equities and bonds. Debt mutual funds are a popular choice among risk-averse investors. These funds comprise of debts, bonds and other government debt instruments. They come with a high risk but this is overcome with the potential benefit of higher returns. These are mutual funds which primarily comprise of shares and stocks of corporations/institutions and other equity related instruments. There are three types of mutual funds: Equity Based Mutual Funds Under this plan, you are entitled to tax deductions up to ₹1,50,000 as per Sec 80C of the Income Tax Act, 1961. Tax-SavingsĪn Equity Linked Savings Scheme is a tax-saving mutual fund which invests primarily in equities and comes with the dual benefit of tax savings and wealth creation. By investing on a monthly basis over a long tenure, you are less susceptible to market risks and will clearly benefit from rupee cost averaging. This is via a systematic investment plan. You can begin with a minimum of ₹500 per month. Mutual funds do not require a large sum of investment. Since the risk is diversified, mutual funds are much safer to invest in case you do not know how the stock market functions. Mutual funds are diversified investments which mitigate risk by investing in different sections of the market. Additionally, you can also see other details online such as fund performance, fund manager, NAV, fund size, rate of return etc. You can simply visit the website of the top performing mutual fund houses and purchase any number of funds online. Also, mutual funds are easy to research and subscribe. A mutual fund is managed by a group of financial experts on your behalf. Let’s churn out the benefits of investing in mutual funds for young investors… Simple and ConvenientĪs an investor, you need not be aware of the complex financial concepts required to invest in mutual funds. Why are Mutual Funds good for young investors? Therefore, it is ideal for you to invest as soon as you start earning or post the emergency fund. This brings out higher market-linked returns in the long run. When you invest early, your money is invested for a longer tenure. As the saying goes, the younger you start, the better the returns.
Moving on further, mutual funds are best suited for young investors between the age of 20s and 30s. In case something untoward happens to you, you know that you at least have sufficient money in your bank account. Your savings must be satisfactory for at least six months. Before you begin your investment journey into the world of mutual funds, it is imperative that you have a substantial amount of savings at your disposal.
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