Invest In Mutual Funds To Brighten Up Your Financial Future This Diwali
Oct 22, 2019

Author: Divya Grover

(Image source: Image by bhupendra Singh from Pixabay)

It's that time of the year again when regardless of on-going difficulties, be it in personal or professional life, we make way for cheer and indulgences.

Yes!

Diwali the festival of lights, hope, joy, and prosperity is here!

Every year people usher in the festival with the common household ritual of cleaning the house and beautifying it with rangolis, diyas, flowers and lanterns, preparing special sweets and savouries, and shopping to one's heart's content. The mood around Diwali is so enthralling that it just cannot go unnoticed.

You may want to leave no stone unturned to enjoy the festivities in the best way possible. Just ensure that your expenses are within your means. It is easy to fall into sales trap such as heavy discounts, cash-back offers, and no-cost EMIs, and buy things you don't actually need.

You may not realise it now, but going overboard with expenses can have a long term impact on your finances. Additionally, if you are lucky enough to receive Diwali bonus and cash gifts amidst a slowdown, it makes sense to carefully invest it.

So this Diwali while you enjoy the festive fervour and spend time searching for the best products for the festivities; take time to research and choose the best financial products to invest in and lighten up your financial future as well.

[Read: 7 Best Ways To Productively Deploy Your Diwali Bonus]

Often money lies idle or it is invested in low-interest yielding avenues. This practice will not help you counter the inflation bug or realise your goals. To multiply your wealth and counter inflation, you need to deploy it productively in wealth-creating avenues such as mutual funds.

Mutual funds are professionally managed by financial experts who create a portfolio by carefully identifying instruments for investment. You can invest across equity and debt funds that will address both short and long term goals. This enables diversification; as a result, the risk involved is lower.

You can start investments in mutual funds with as little as Rs 500. The funds can be redeemed whenever required making it a liquid avenue, however, loads and taxes may be applicable.

To take care of your long term goals such as retirement, children's education/marriage, opt for equity mutual funds. Equities have the potential to generate higher returns over a period of time than any other asset class.

Depending on your financial goals, risk appetite, and investment horizon, you can diversify your investment across large cap funds, large & mid cap funds, mid cap funds, multi-cap funds, aggressive hybrid funds, and value style funds. Carefully assign weightages to each category based on your personalised asset allocation plan.

[Read: Here's Why Asset Allocation Is The Cornerstone For Planning Your Retirement]

Selecting the right funds is the key to gain the maximum benefit from mutual fund investment. So invest in scheme that has performed consistently well as compared to its benchmark and category peers. Choose a fund house that has a fairly long track record and the one that follows prudent investment practices.

Equity markets are currently volatile and may continue to remain so in the foreseeable future. However, it will not be in the best interest of your financial wellbeing if you get discouraged by the volatility and postpone your investment. Remember it is the early bird that catches the worm.

To tide over volatility, invest for long term and opt for the systematic investment plan (SIP) route that enables you to invest a fixed amount regularly. This way, you can benefit from lower investment cost and compounding of wealth.

For your short term goals such as building a contingency corpus, planning a vacation, etc., you may opt for stable and low risk avenues such as short duration debt funds or liquid funds or overnight funds.

In India, gold and festivals go hand in hand. Further in uncertain times such as now, gold can act as an effective hedge. So, you can consider investing 10-15% of your investment portfolio in gold. Investing in gold ETFs and gold saving funds is a smart and strategic way to invest as you can tangibly hold gold without facing any storage concerns or worries about theft.

Just like cleaning the house is essential before Diwali, your portfolio may also require cleaning, i.e. review the performance of your scheme periodically, do away with schemes that are non-performing and replace them with better alternatives. This corrective measure will make sure that your investment is well aligned to achieve your financial goals.

Exchanging gifts is part of Diwali traditions and you can choose this auspicious occasion to secure the financial future of your near and dear ones by gifting them a SIP.

The time is ripe, and it is in the interest of one's bright financial future or wellbeing to invest in the best mutual funds. This Diwali, illuminate the lamp of wisdom amidst the gloom, win over the dark times, and celebrate the wealth creation process.

Editor's Note:  If you're looking for "high investment gains at relatively moderate risk" in current turbulent times, consider 2019 Edition of PersonalFN's Premium Report, "The Strategic Funds Portfolio For 2025"

It is based on the Core and Satellite approach of investing, which has the ability to generate lucrative returns over the long term via SIP route.

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Happy Diwali and Happy Investing!



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