Mutual funds are highly recommended as your one-stop shop for practically all of your investment needs. Regardless of whether you desire to save for purchase of your car within a year’s time or simply put away some money for your children’s higher education few years from now, or whether you simply want to save taxes or earn regular income during your retirement years, best return mutual funds are certainly the best investment vehicle to reach your goals. It offers everything that new investors seek including low charges, flexibility and ease of investment and withdrawals, lower taxes, diversification, transparency of investment etc.
What Do Investors Want?
• Better tax efficiency
• Safety of capital
• Flexibility of withdrawal
• Ease of investment
Your financial goals can be broadly divided into 3 categories: a) short term goals ranging from 1-3 years b) medium-term goals ranging from 4-6 years and c) long-term goals ranging from 7 years and above. Although bank deposits have been recognized as the preferred instrument to create savings for your short-term goals, it is recommended that you invest in the debt mutual funds that are considered to be the best return mutual funds and serve as a better alternative to bank deposits.
Debt mutual funds are also considered to be more tax efficient especially when held for over a period of three years and are also known to generate higher returns for the investors. You could be saving to buy a car, wanting to go on a foreign holiday or even putting away money for your child’s college admission. If you are saving to purchase a car in the next 2-3 years, you may want to consider short-term debt funds that will give you higher flexibility.
What Do Investors Look For?
• Moderate risk to capital
• Flexibility of withdrawal
• Higher returns than debt
• Favourable terms
Balanced funds have been doing exceptionally well in the past few months since both the equity as well as debt markets have been at par. However, this performance may not continue, so investors may want to tone down their hope. Also, investors must keep in mind that the one-year return on their debt-oriented balanced fund is usually more than those from the equity-oriented scheme. But these changes when considered under the medium- and long-term returns are usually greater. The five-year return of the top ten equity-oriented balanced funds has been considerably higher.
Equity funds are an ideal option when investing for your long term goals such as children’s education or for your retirement planning. Diversified equity funds are considered to be one of the best return mutual funds and are known to have created massive wealth for investors over the past decade. However, selecting the right fund and monitoring the progress is vital. In the past, several of the well performing funds have been beaten down and given average returns. Hence, it is vital that you consult your fund manager before investing in the market.
