Hello Readers!!

Mutual fund investment is subject to market risk, a line that we usually hear whenever we hear mutual fund advertisement or when we see any post related to the same. Well, this is said because investment in mutual funds is market-linked and thus associated with different kinds of risks. However, risk in mutual funds is manageable.

When people converse about mutual funds they have this one line, somewhere stuck in the mind always, and only this, it made people think that mutual funds are all related to Equity fund investment for long-term wealth creation. However, there is one more side of mutual funds that includes a wide range of mutual fund schemes that are not only concentrated on wealth creation but also help you preserve it!!

Along with earning returns, products that are relatively low risk or where returns are not volatile will also keep capital safe. You must have heard about these funds. These are basically the least risky debt funds that are liquid funds and ultra-short-term funds.

These funds are featured with some prominent features like low risk, stable returns, high liquidity, that help you fill the capital preservation section of your portfolio.

These Fund Help Protect Capital!!

Generally, when we invest, we invest that part of our saving that we want to grow in the long-term, basically, we take short-term risks of volatility, on this amount and that part of our saving is kept that we don’t keep safe. This amount can be preserved anywhere say in a bank fixed deposits or in our saving bank account.

This safe keep money is basically meant for our short-term needs say for a car down payment in a month’s time or paying school fees after two months or just for your planned vacation in six months. As these goals are near, so we hardly take any kind of risk on this capital and thus keep it away from investment.

However you can keep this capital in selected liquid funds, here you will experience dual benefits, first, it will help you preserve your capital and second, it will also give some return to your investment although it will be less than the equity mutual funds. The biggest advantage is that you do not have to define your period of investment and get the flexibility to withdraw whenever you want to.  

These Funds Help Preserve Your Wealth Created!!

Experts advise Equity Fund Investors if you have been investing for long period and you are near reaching your corpus, then slowly and gradually start moving your wealth created at a place where you can give it a shield of capital protection. Basically, you have to preserve the wealth that you have created in the long run. The benefit of this is that your corpus created won't have to suffer due to any further short-term fluctuation in the market if on time you will transfer them in the least risky liquid funds.

Simply you need to transfer your wealth create in equity mutual funds, systematically to liquid funds. Also, the liquid fund will continue adding a bit more returns to your wealth for the time you remain invested in it. So, once you are near reaching your goal or you feel that you have created a good corpus, start an STP (Systematic Transfer Plan) in your equity funds and transfer your wealth created systematically in a liquid fund. You may choose to move it to debt or equity funds depending on your needs.

Keep reading for more updates on Mutual Fund Investment!!

For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).