Friday, 30 October 2015

Best Mutual funds For Your Short Term Financial Goals

Posted by MyInvestmentsPub
In my previous article, we have seen good Mutual funds for your long term goals. In this, we will see the good Mutual funds for your short term goals. Whenever you are planning your financial plan, the first thing you must do is to identify your long term as well as short term goals. After identifying the goals then you should find out the right mutual funds to attach to your goals. Hence, the goal setting is your first foundation for your financial planning. The selection of right Mutual funds for your goals is establishing your financial planning.



Why Short Term Financial Financial Goals:


  1. To protect from any unexpected financial crisis
  2. To make the way for long-term goals
  3. To ensure smooth financial management
  4. To become punctual in investing
  5. To control your un-necessary expenditure

The Short Term Financial Goals Everyone Should Have: 


Most of us wanting financial stability, but very few of us have it. To create financial stability, every one should establish short term financial goals.Each financial goal will have time horizon and the amount you need to accumulate at the end of the defined time horizon. Unlike long term goals, short term goals will have smaller scope and amounts with definite target date to accomplish the goals. On a thumb rule, if the time horizon of any goal is less than 3 years considered as short term goal. The following are the important short term goals for any person and we will discuss about these goals in detail:

  1. Building Emergency Fund
  2. Down payment for your Home loan / car loan
  3. Taking Vacation
  4. Your Marriage expenditure (applicable to bachelors)

Best Mutual Funds for Your Short Term Financial Goals:


Many people believe investing in Mutual funds is riskier than traditional investment products like Bank FDs, Insurance Policies, Postal Investments etc. However, there are some Mutual funds (like Debt Mutual Funds) which are equally safer and provide better returns than the traditional investment products. However, based on your short term financial goal, you should select appropriate Mutual funds. We will see the right Mutual funds for each of your short term financial goals here.

1. Building Emergency Fund:


This is the top most important short term financial goal. Before starting your financial planning, the first thing you should do is Building Emergency fund. On a thumb rule, this amount should be equal to 6 months of your net earning income. If any emergency situation like losing the current job or medical emergency situation occurs, this amount will be helpful to overcome those situations. As this is an utmost important short term financial goal, the Mutual fund you have selected should provide safety to your investments as well as better liquidity. Hence I suggest to go for Liquid Mutual funds. Liquid Mutual funds not only provide better safety returns but also liquidity. It will take just 1 business day to en-cash. The following are the suggested Mutual funds for building your emergency fund.


2. Down payment for your Home loan / car loan:


Taking Home loan or Car loan is common now-a-days and is also an important Short term financial goal. Priority wise this comes in second position. You can have time horizon from 2 - 3 years for this financial goal. Hence, you can select Mutual funds with little risk and better returns than the Liquid Mutual funds. Generally the down payment of your home or car will be 20% - 25% of the total cost of Home or car. You may need 1 lakh - 5 lakhs based on the asset. I suggest the following Mutual funds are best suited for your down payment of Home loan or Car loan.

3. Taking Your Vacation:


Though this is not a mandatory short term goal, but priority wise this is also an important short term financial goal that every one should have. Taking break from the usual busy life will not only bring you a great relief but also fresh intact energy in you. This is your fun part of your budget. Hence, I suggest take a vacation at least once in a year. By investing into a selected Mutual funds on regular basis, you can achieve your dream vacation with less effort. You can take some risk in selecting the Mutual funds for this goal. The following are the best suitable Mutual funds for your vacation:


4. Your Marriage expenditure:

Though this is applicable to bachelors, this is also an important short term financial goal. As the marriage expenditure is increasing year on year, you may need at 3 - 5 lakhs based on the current conditions. This may increase in future. Debt Mutual funds with medium risk and returns are suitable for this goal. Hence, I am suggesting the following Mutual funds for Marriage expenditure goal. There will be some other important short-term financial goals which includes Home improvement expenditure, Credit card loan payments etc. For those goals also, you can invest into these mutual funds.


Conclusion:

Planning and investing into short term Mutual funds would provide financial stability and give you confidence to face any challenge in your financial life.

Happy Investing!

3 comments:

  1. Why have you invested balanced mutual funds for short term goals as equity for short term is considered to be risky.

    ReplyDelete
  2. I have suggested Balanced Mutual funds for Vacation goal only. As this is comparatively lesser important goal, you can take some risk. Hence, I suggested Balanced Mutual funds for this goal. For the remaining goals, I suggested debt funds. Anyways, thanks for your inputs.

    ReplyDelete
  3. Helpful article especially for the beginners. However, Mutual Funds are one of the best investment option, which can also be started from the affordable amount.

    ReplyDelete