10 mutual funds to buy this Diwali that can grow your wealth
Diwali is not just a festival of light. It is also considered to be an auspicious festival for making investments. It is believed that the investments made in Diwali multiply on several occasions. For those who believe that slowness and consistency wins the race, mutual funds are a great option for investing.
Mutual funds come in different shapes and sizes. You can invest in it depending on your financial goals. Here is the list of mutual funds that can not only help you reach your financial goals, but also help you build wealth.
1) Liquid fund: If you like to see your savings account grow, then Liquid Fund is for you. It is ideal for short term parking. It generates higher returns than a savings account. You can withdraw the funds at any time. If the opportunity arises, you can even transfer your investments into stocks. For example, Quantitative liquid fund generated returns of 4.69% over a two-year period and 5.57% over a five-year period. This is higher than a regular savings account.
2) Debt fund: Whatever your investment preference, debt should be part of your portfolio. It provides stability and protection against volatility. For those who hold it for 3 years, their returns are qualified as long-term capital gains with indexation advantage. In this category Dynamic Axis Bond Fund generated returns of 4.22%, 8.62% and 9.78% in one, two and three years, respectively.
3) Aggressive hybrid funds: Hybrid funds, as the name suggests, invest in equity and debt. It is a perfect combination of security and growth. More importantly, since it qualifies for the taxation of stocks, it is ideal for new investors. Kotak Hybrid Equity Fund delivered a phenomenal 50.40% return in six months. It delivered 22.24% and 13.69% in two years and three years, respectively.
4) Equity Savings Fund: Another Hybrid Scheme, but more prone to debt. These funds typically invest in equity, debt and arbitrage opportunities. Since these funds have low exposure to equities, even seniors can consider these funds with a horizon of 1 or 2 years. Among these funds, SBI Equity Savings Fund boasts a strong risk-return profile. It delivered 13.87%, 12.62% and 8.86% in one, two and three years, respectively.
5) Large-cap funds (equities): If you want to invest in stocks and your money is growing steadily, these are your best choices. Large cap funds are less volatile than their mid and small cap peers. These are your best bet for long term goals. We should consider Axis Bluechip Fund in the Espace Large Cap. It generated astonishing returns of 51.90% over a six month period. Its long-term return profile is also impressive, with returns of 24.48%, 24.98%, 19.08% respectively in two, three and five years, it has delighted investors despite the sharp decline observed. in 2020.
6) Mid-capitalization funds (equities): These are a bit riskier than their large cap counterparts, but have the potential to generate above-average returns. These funds invest in growth companies with untapped potential. If you want to invest in financing your child’s education or paying the down payment for a house, then these funds are your best bet. Take the PGIM India Midcap Opportunities Fund. It enriched short-term investors by offering returns of 95.29% in one year. Even considering a 5-year horizon, this fund continued to perform silently.
7) Small cap funds: If taking risks is your style, look no further. These funds are very volatile and can generate extraordinary returns over the long term. These are not for the faint hearted and therefore investors should have very limited exposure to these funds. Even if you like to take risks, only invest in these funds if you have a long-term time horizon. Small Cap Quantitative Fund has proven that small is beautiful. It generated returns of 124.15% over a period of one year. Even in five years, it delivered 23.17%.
8) Multi-Cap Equity Fund: If you want the flavor of large caps, mid caps and small caps, multi cap funds are your best bet. Consider this, a Midcap fund may be forced to invest in Midcap stocks even if the market is not performing well. Multi-cap funds have more flexibility here. These funds create long-term wealth. BNP Paribas Multi Cap Fund monopolizes the limelight with its stellar performances. It generated a staggering 70.82% return in one year. But it’s not just short-term performance. Even over a period of two, three and five years, the fund generated 29.83%, 23.68% and 16.24% respectively.
9) International funds: If you’ve always wanted to own top-notch stocks like Amazon, Facebook, Netflix, or Apple, but couldn’t due to geographic barriers, then international funds are for you. They not only offer portfolio diversification, but also protection against local volatility. Blue Chip ICICI PRU US Equity Fund offers the window to the world. It recorded an impressive performance of 20.09% over a period of five years.
10) ELSS Fund: A must have in your wallet. These funds are ideal for enjoying the benefits under Section 80C of the Income Tax Act 1961. They have the lowest blocking period among tax saving instruments. Over the long term, they can offer above-average returns. One can consider Canara Robeco Equity Taxsaver Fund. In addition to tax savings, it generated great gains for investors. It delivered 61.69% in one year. Since these funds have a three-year lock-in period, for those who are skeptical, the fund generated a return of 28.27% over a three-year period.
The universe of mutual funds is vast. It is therefore always advisable to seek the advice of a qualified financial planner before making any investment decisions.
(By Abhinav Angirish, Founder, Investonline.in)
Disclaimer: These are the personal opinions of the author. Readers are advised to consult their financial planner before making any investment.