Consider these 9 things before investing in mutual funds!
What is the right way to invest in mutual funds? How do mutual funds work? What kind of risk is involved? Which fund is right for whom? What things should be kept in mind before investing? Watch this video to know-
With people confined to their homes for over 12 months, an unusual winner has emerged due to the pandemic-induced situation — household savings. According to the EcoScope report released by Motilal Oswal, household savings rose to 22.5% of GDP in CY20 from 19.8% of GDP in CY19.
A back of the envelope calculation reveals that on average, an individual can save a minimum of Rs 250 a day on conveyance and food, which works out to Rs 7,500 a month and Rs 90,000 annually. That is just the saving on commuting and snacks of one person. If expenses on dinner outings, movies, vacations etc. are included, the number would work out to be much larger. So now the moot question is: How to put these savings into good use?
“One should use these additional savings to pay off any liabilities. Accelerate and make a bullet payment for loans especially personal loans,” says Harshvardhan Roongta, Principal Financial Planner at Roongta Securities.
Becoming debt-free is among the first step towards achieving financial freedom. But if you are someone who doesn’t have any liabilities and yet managed to save a decent chunk of money in the past one year and are not looking to spend that money, then equity-based mutual funds are a good investment option.
“Since this is surplus money out of regular calculation an individual should opt for aggressive bets by investing in midcap & smallcap funds provided you understand all that,” explained Roongta.
This will help in creating wealth over the long term and enable you to achieve financial goals. Roongta suggests the following funds for investing lockdown savings.
But if you are someone who is looking to spend once the lockdown restrictions are lifted, then go for short duration funds.
Channelising your lockdown savings in the right direction can help you create wealth in the long run while in the short run, it can enable you to upgrade your room on your next vacation.
(Disclaimer: The above list is for informational purpose only. Before investing, please consult your financial advisor)