Individuals who are unhappy with their existing financial condition must look into their investments and understand where they are going wrong. Financial planning helps individuals determine their life’s short term and long term financial goals. When you make a financial plan and accordingly diversify your investment portfolio, it becomes easier to target your goals accordingly. One reason why your investment might not be performing might because of the falling interest rates. Investment schemes like bank FDs are offering fixed returns with low interest rates that range between 4% to 5%. With such low interest rates, it becomes impossible to growth your existing wealth.
This has also been the primary reason why several individuals are now shifting to market linked schemes like mutual funds. Mutual funds are a pool of professionally managed funds that invest across various asset classes and money market instruments for income generation. What AMCs do is that they collect money from investors and invest the capital raised to achieve a common investment objective. Mutual funds are known to invest across domestic and international markets along with debt securities like commercial papers, government securities, certificate of deposits, cash and cash equivalents, treasury bills etc. The performance of a mutual fund scheme is believed to depend on the performance of its underlying assets as well as all the sectors and industries they invest in.
What are multi asset funds?
Mutual funds are further categorized by market regulator SEBI to help investors take an informed investment decision. Out of the several mutual fund categories, hybrid schemes have become an ideal investment option for those seeking diversification. Hybrid schemes are famous for their unique asset allocation strategy as these mutual funds invest in both equity and debt. And some funds like multi asset allocation funds invest in three or sometimes even more asset classes for income generation.As per SEBI guidelines, a multi asset allocation fund must invest a minimum of 10 percent in any three asset classes. Investors seeking to add a well-diversified mutual fund scheme to their existing portfolio can consider investing in multi asset allocation funds.
Add multi asset allocation funds to your mutual fund portfolio
The key to long term wealth creation is adequate and proper amount of allocation. A multi asset allocation fund generally invests in equity, debt, and gold. Gold as an asset is known to act a hedge against falling markets. Investments in debt instruments ensure that investors receive steady income. We all known that equity markets are highly volatile but also have a high risk returns tradeoff.By investing in three asset classes, a multi-asset allocation fund ensures that investors get to invest in a diversified portfolio of securities.
These funds offer active risk management as the fund managers strive towards ensuring that they have adequately diversified the scheme’s investment portfolio. Investors can also start a monthly SIP in a multi asset scheme of their choice. Systematic Investment Plan (SIP) ensures that you save a fixed amount at regular intervals and continue to invest till your investment objective is accomplished. Thanks to SIP calculator, a free online tool available for everyone, investors can also determine the overall value of their investments over a stipulated time period. If you are new to investing and keen on inculcating the discipline of systematic and regular investing, you can consider starting a monthly SIP. To benefit from power of compounding and rupee cost averaging, it is better to keep a long term investment horizon and continue investing in multi asset funds via SIP for a minimum period of 10 year