The Relationship between Mutual Funds and Financial Planning

All of us have certain hopes, dreams and goals in life, which can be achieved only if we work really hard for a long time but what if we told you that there is an alternative way to fulfil your dreams sooner than you thought? Smart investment and a solid financial planning are the keys to achieving your dreams.
The success and pace of fulfilling your dreams depend on your amount of savings and resultant investments. At a time, when investments in traditional instruments are falling short to meet your financial expectations, mutual funds are emerging as an effective investment tool to meet one’s immediate or delayed financial goals.
There are numerous mutual fund baskets available in the market, which are suitable for every investor and complies with their financial policy.

How mutual funds are key towards proper financial planning?

The comprehensive process of financial planning acts as a strict guardian, who assesses your finances and draws limits for you to abide by. It also helps you set financial goals and objectives and monitors your financial decisions towards achieving them. Mutual funds are professionally managed investment instruments that help investor develop a solid financial plan.
If you are confused about the relationship between mutual funds and financial planning, let’s take a look at the following key features of mutual funds that serve as a tool for solid financial planning:

Mutual funds have a pre-declared objective that pursues specific investment strategies, by considering the merit of each type of security and examining the portfolio’s strength against crucial indicators like government policy, financial elements and economic condition.
Mutual funds aim at ensuring satisfaction by meeting the primary goals of safety, protection and growth of capital through a steady generation of income with the use of a combination of funds to build a customized portfolio.
Mutual funds offer the advantages of professionally managed pooled investments which are backed by research, can be instantly diversified even with a minimum amount of capital and are extremely easy to entry and exit.
Mutual funds are low-cost investment instruments that ensure a structured growth of corpus added with compound investing.
Mutual funds abide by strict SEBI regulations and therefore ensure transparency in reporting and submission.
The profit or loss in investment is reflected in NAV, when it go up, the prices of investment in a fund increase and when it falls, the fund decreases.
Net Asset Value (NAV) tells us the price per unit on a particular day
Mutual Fund SIP can be used as an instrument for the controlled growth of capital, Rupee Cost Averaging and protection of the investment of small investors from volatile market changes in an organised and regulated manner by carrying SIP over a long period.
The features of mutual funds execute an effective financial planning, which generate a provision for income and help combat the volatility of the market. Get in touch with us to avail more information on this topic or for any kind of financial query.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 85350

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