Why Balanced Mutual Funds Are Good Choice For First-Time Investors
Posted by someshmane on August 24th, 2018
When one thinks about investing in the stock market - the first thought that generally pops up is ‘risk’. Investing in the stock market carries with itself a certain level of risk. Equities are a preferred choice for investors who have a high-risk appetite and want high returns. Debt funds, on the other hand, are a suitable choice for investors who have a moderate risk appetite and want steady income. But what if an individual wants to dip his or her hands in both. It has been observed that first-time investors are inclined towards equity investments, but are hesitant to take on the risks associated with it.
Balanced funds are a type of mutual funds where investors’ money is put into a mix of equity and debt funds. This not only safeguards the investor from inflation, but also helps him or her achieve better post-tax returns. For tax purpose, however, this kind of mutual fund is classified as equity funds since at least 65% of money is put in shares. This helps ensure that there is no capital gain tax, if an investor decides to stay invested for at least a year. Additionally, the dividends are tax-free. Balanced funds are the only mutual fund scheme where even the debt component is taxed as equity. Taking into consideration all of these benefits, this type of mutual fund is the best positioned for investors.
Types of Balanced Funds
Balanced funds can essentially be divided into two categories:
Best Performing Mutual Funds
Before investing, one needs to be aware of what the best performing mutual funds are. We have compiled the names of the schemes, along with their NAVs, 1-year return, 3-year return and 5-year return. Here is a look at the top 5 best mutual funds:
Besides new investors, the above mentioned best mutual funds are also a good investment choice for investors who are conservative or want better returns than debt funds.
Choosing a Balanced Fund
Besides looking into the history of the schemes, choosing a balanced fund requires careful evaluation of one’s long-term goals. Experts suggest that when an investor is deciding which type of mutual fund to put money in, the deciding factors of both the asset classes i.e. equity and debt need to be considered. On the equity part, investors need to look into factors like the fund house, asset value, constancy of portfolio, fund manager, diversification, asset size, risk taken by the fund, and the historical returns. When considering the debt funds, investors should pay attention to the fund manager’s qualification, asset quality, and sensitivity of the fund to changes in the rate.
The above-mentioned best performing mutual funds can be taken into consideration while shortlisting plans for investment consideration as they belong to prominent fund houses and have delivered positive results in the past. However, it is essential to analyse one’s own short-term and long-term financial goals and then ascertain which plan is able to meet the objectives the best.Top Searches - Trending Searches - New Articles - Top Articles - Trending Articles - Featured Articles - Top Members
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