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How to plan for a financial goal using mutual funds

There are many distributor and aggregator portals that suggest specific investment plans to support a particular goal after basic information is keyed in. Investors can consider these options to make goal-based investments.

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Last Updated: Feb 10, 2020, 06.30 AM IST
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To create emergency corpus, use a low risk liquid fund.
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Everyone has goals to achieve in life, many of which are related to money. Some goals are long-term, like retirement planning, while others are short-term, such as buying a car. While planning financial goals, different aspects need to be considered. Mutual funds can help one realise financial goals, and should be chosen with one’s unique situation in mind.

Goal oriented funds
There are mutual funds that cater to specific life goals such as children’s education and retirement. Investors can consider these funds to build a corpus for the respective goals.

Goal based portals
There are many distributor and aggregator portals that suggest specific investment plans to support a particular goal after basic information is keyed in. Investors can consider these options to make goal-based investments. The investor needs to register on the portals and key in information such as nature of goal, amount to be invested monthly and years to achieve the goal.

SIP
A systematic investment plan or SIP allows investors to contribute regularly over a period of time to achieve a financial goal. The desired fund can be chosen and SIP form filled along with NACH mandate. Amount of instalment, frequency, duration of SIP must be mentioned in the form. SIP can be set up online through a fund house’s portal or a mutual fund aggregator or distributor’s website.

Lump sum and STP
A lump sum can be invested in a lower risk profile scheme and a systematic transfer plan set up into an equity fund. Lump sum investment can be made by filling up an application form in case of a new folio and an additional investment form in case of an existing folio with the fund house.

Points to note
  • KYC compliance is a must.
  • To create emergency corpus, use a low risk liquid fund.
  • Take services of a financial adviser to chalk out a financial plan which will take into account different aspects such as risk appetite and goal duration, amongst others.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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