Investing in mutual funds, mutual fund investment guide, and investment options, mutual funds, mutual fund investment, invest in mutual funds, types of mutualfunds, invest in mutual funds online
We all need to money to cater to our unseen expenses such as home repairs, automobile malfunction, or any other medical emergency or bills. In fact, experts suggest that one of the primary goals of all should be to create an emergency fund that caters to their three to six months of living expenses. But, is it wise to keep your entire savings in your savings account? Although it’s essential to have an adequate emergency fund in place, one should not allow their savings account balance to climb too high. Why, you ask? Because, when your savings account balance surpasses the upper limit, you miss out on the opportunity to earn better returns on your money. This article aims to act as a mutual fund investment guide for investors.
Why you shouldn’t leave too much money in your saving bank account?
One of the biggest concerns about too much money laying in savings account is that the money is always available for unnecessary spending. When you are not earning too much interest on your money, you might get tempted to might as well spend it. Also, when your entire capital is readily available and accessible, it leads to a false sense of security that you don’t need to hold off your money for your future needs. Also, it goes without saying that you lose the opportunity to earn potential returns on your money.
The fact remains that not only you need the capital for your future financial needs, you also need your money to grow at a desirable rate. With the rate of inflation close to 6% p.a., if you let your money sit idle in savings bank account, the value of your money would be falling instead of growing. This means that the value of your money decreases with time.
So, what should one do to change this? Simple, choose better investment options
Where should you invest?
You might consider investing in mutual funds. Mutual funds have the potential to cater to your both short-term and long-term needs. With different types of mutual funds available to an investor, choose the one that best suits your financial needs.
If you have goals to attend in the short-term, you might consider moving your money to relatively safer investment options such as liquid funds, debt funds, etc. that provide an investor with the much needed liquidity while trying to deliver inflation-beating returns.
However, if you have a long-term investment horizon, you might consider investing in equity. Equity, though volatile has huge potential to deliver significant returns in the long run. You might consider investing in Equity-Linked Savings Scheme (ELSS) that invest a majority of their assets in equity and equity-linked securities. ELSS mutual funds offer a tax deduction of up to Rs 1.5 lac under Section 80C of the IT Act. Thus, these mutual funds offer the dual benefits of capital appreciation and tax saving benefits to investors.
You can also consult an expert who can help you invest in mutual fundsthat compliments your investment portfolio. Today, an investor can easily invest in mutual funds online from the comfort of their home. Happy investing!