What are the mutual fund schemes on offer?

There are two types of mutual fund schemes. Open-ended and closed-ended. Open-ended mutual funds are those schemes that can be redeemed whenever required. Closed-ended schemes are those which are open for purchase under a new fund offer (NFO). Investors cannot enter the scheme after the NFO period closes, and existing investors cannot exit until the tenure is complete.

Within this broad classification, there are different types of mutual funds based on the assets they invest in. These include equity funds, debt funds, and balanced funds. Let’s take a quick look at each category:

1. Equity funds: These are MF schemes that invest in listed stocks of companies. Here, some schemes could also be investing in specific sectors such as banking, consumer goods, retail, or information technology.
2. Debt funds: These are MF schemes that invest in government bonds and corporate bonds. This could be ideal for investors who want fixed returns but low volatility.
3. Balanced funds: These are MF schemes that invest in equity and debt. Hence, this could offer wealth generation along with stable returns. Child plans, monthly income plans, and pension plans are a few examples.

If choosing between funds sounds complex, you could also opt for the pre-generated SIP packs available on SC Invest.

Selection based on life goals

Each life goal may require a unique investment approach. That is where need-based investments could come in handy. A mix of mutual funds schemes could help you fulfil your ambitions at each life stage. Here’s a look at the MF options to assist your aspirations:

• Home purchase: Property purchases may require a lump sum investment at the beginning. That’s where mutual fund investments could be beneficial. Blue-chip mutual funds that have exposure to company stocks with large market capitalisation could be one such avenue to invest. Section 54F of the Income Tax Act offers exemption from long-term capital gains tax if the entire proceeds are reinvested into buying a house. This exemption is available if you don’t own any other residential property.
• Child education: Expenses for higher education are on the rise. And mutual funds could help bridge the gap. Investing a fixed amount every month through a systematic investment plan could help accumulate the corpus. For instance, if your child is 8 years old and the current cost of higher education is Rs 25 lakh, this will zoom to ~ Rs 65 lakh in 10 years. A mutual fund investment could help cover the costs if you invest Rs 31,500 every month for this 10-year duration, assuming a 10% annual rate of return.
• Wedding: Planning a lavish wedding could cost upwards of Rs 40 lakh. Investing in a mutual fund scheme could enable financial independence. Here, investment in an equity mutual fund or a balanced fund for at least a five-year duration could help in wealth accumulation to meet the expenses. The power of compounding could also be an added benefit. Simply put, your MF returns also earn returns, and that enables a higher wealth corpus.
• Retirement: It is never too early to plan for retirement. If you have at least 20 years left for retirement, you could choose MF schemes with moderate risks that invest in equities and bonds. This could help build a retirement kitty while earning consistent annual returns. If you are unsure about which MF scheme to pick, the Standard Chartered Fund Select option could help you make a decision.

Mutual funds are subject to market risks. Hence, it could be advantageous to keep track of the scheme’s annual return. Based on changes in your life goals, mutual fund investments can be tweaked accordingly. The Standard Chartered market insights could be another tool to get a glimpse into the changes in global financial markets and their impact on your investments.

A consistent, systematic, and disciplined approach to MF investing could empower you to take financial decisions freely. This could enable your investments to grow in harmony with the equity and debt markets. No dream is too far-fetched if you could set aside funds on a regular basis.

Disclaimer:

This article is for information and educational purposes only. It is meant only for use as a reference tool. It has not been prepared for any particular person or class of persons. The products and services mentioned here may not be suitable for everyone and should not be used as a basis for making investment decisions. This article does not constitute investment advice, nor is it an offer, solicitation, or invitation to transact in any investment or insurance product. The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment. Prior to transacting, you should obtain independent financial advice. In the event that you choose not to seek independent professional advice, you should consider whether the product is suitable for you. You should refer to the relevant offering documents for detailed information.

Standard Chartered Bank is a distributor of mutual funds and referrer of other third-party investment products and does not provide any investment advisory services as defined under the SEBI (Investment Advisers) Regulations, 2013 or otherwise. Investments are subject to market risk. Read scheme-related documents carefully prior to investing. Past performance is not indicative of future returns.