Amar Pandit, Founder & Chief Happiness Officer, Happyness Factory.in
Getting Rich isn’t a one-time thing. It involves years of saving and investing your hard-earned money in the right place, at right time. This regular and disciplined manner of saving and investing will help you become not just rich but Happy Rich! Every penny that you save and invest is like a seed to your financial freedom.
One of the best thing to do at such times is to consult a financial planner. One of the biggest misconception people have today is that they think that financial planner is only for the rich and the HNIs. Not true. A qualified financial planner will help you identify your life goals and to achieve them with the help a financial plan. His main goal is to keep you financially safe. As a new investor, you may not be aware about the important factors that need to be considered while making investments such as - time horizon, risk profile, portfolio diversification, etc. Further, your goals and investments need to be perfectly synchronized to avoid any financial distress. Hence, a financial coach is necessary to make an investment plan which is in line with the above factors.
This is like hiring a trainer at the gym: yes, you can work out on your own, but a gym trainer would help you get fit faster and more effectively. Similarly, a qualified financial coach will help you to get richer and achieve your financial goals more effectively. There are many avenues of investments and a financial planner will help you select the right type of investment for you. Mutual funds in one such avenue that will help you achieve your financial goals.
There are many other products such as Direct equities, Insurance products, Debt products (Fixed Deposits, bonds), Gold, etc. in the market, for one to invest in. Then why choose MFs over others?
We have shared our reasons below as to why Mutual Funds should be preferred investment option….
Variety of Schemes: Mutual funds offer a wide range of schemes with different investment objectives. For instance, for short term goals, one can opt for short term debt funds or liquid funds. Debt funds suit the need for capital protection, stability and steady returns. Equity funds are for capital appreciation and are suitable for long term wealth creation. There are Equity Linked Saving Schemes that are for tax planning.
Risk v/s Returns: As an investment instrument, mutual funds offer schemes of Aggressive, Balanced & Conservative nature which makes them suitable for investors of different risk profiles.
Professional Management: To invest in direct equities, one needs to dedicate an incredible amount of time studying the macro and micro environment, along with the company specific fundamentals. It is almost impossible for a lay investor to understand and factor in all these dynamics. Mutual funds are managed by professional fund managers. These fund managers along with their in-house financial analysts and expertise take well researched investment decisions.
Hence, once you have decided to start investing in mutual funds with the help of your financial planner, you can start investing. As an investment strategy, in-order to achieve your goals, you can also set aside and save a portion of your monthly income and start fixed monthly investments - SIPs (Systematic Investment Plan) in mutual funds. The earlier one starts investing towards your goals, the longer time the investments have to grow and the magic of compounding to factor in.