Jul 11, 2016 3 min read

Mutual fund returns act as showers on hot summer days

Returns are the foundation on which the building of a mutual fund schemes stands erectly. The percentage of return attracts the clients towards a particular scheme. So, here is presenting the need for good returns.

The months from January to May has been very unfortunate for the Indian economy. There have been many unfortunate events which have dismayed the picture of the entire industry. Clients have been distracted from equity investments and a situation of distrust has built up among the clients. Numerous investors have drained their money out of the market and reverted back to the age-old saving mechanism. But, as the results for the first quarter of 2016 were declared people got elated. Clients expected the worst returns from the mutual fund market as well. But, instead they presented an above the average returns. The assets managed by the mutual fund industry grew by 16% and thus showing a great potential to grow further.

Apart from monetary growth mutual funds encompass a lot things with them. For example, child education, retirement planning, owning assets etc. Here are some of the important things which can be planned well in advance by using mutual funds.

Retirement Planning

The most important aspect of any employee’s career is the moment at which he/she retires and aims to lead a peaceful post-retirement life. Our parents had a very simple retirement planning by saving either through PPF or NSC. The reason being the absence of many luxuries which have now become an inevitable part of our routines. Earlier, the meaning of retirement was to just finish up all the responsibilities and then lead a simple yet peaceful life. In the present scenario people become more active after retirement. It is because people are not able to enjoy the social life owing to their busy schedules. Thus, clients have to be more particular about planning their retirement. People want to complete all their wishes in their retired life which could not get fulfilled due to the load of responsibilities, whether it may be a world tour or giving wings to the hobbies which could not be honed otherwise. In order to do so clients require a lot of money which could facilitate to fulfill all their investing needs and mutual funds are the correct option for accumulating wealth in a secured manner.

Child’s Future

Every parent has expectations from their children and in order to get those aspirations fulfilled, parents provide their children the best of facilities. The education system has experienced a revamp in the recent years and had incorporated many changes, cost being one of them. The cost of studies even at the elementary level has increased drastically. Parents have to pay a big amount every month for educating their children in established schools with all the amenities. Talking about higher education, it is the most costliest affair. For example, if the cost of any post graduate degree is Rs. 15 Lac, then in the coming few years it would almost double. Thus, to accumulate such an enormous amount parents are required to commence their financial planning at an early stage. So, they are able to accommodate their child’s education easily and give them a better future which they deserve.

Purchasing house

Buying a house is a lifetime dream of each and every person, but it is not a piece of cake owing to the amount of money involved in it. The land prices are hiking day by day which is makes it difficult to cope with the rising prices. The clients have to start planning for buying their house from the day they get the idea of owning a house. There are a lot clients who spend all their lives to accumulate money for their house and have to sacrifice all other dreams. Mutual funds provide a lot of schemes which would generate capital gains for the clients so that they can easily purchase a dream house of their own. This would not only allow the clients to buy a better accommodation to live in but will also let them fulfill their other aspirations as well.

Thus, mutual fund allows the clients to create wealth through a secured and more planned manner. The clients will have an option of capital appreciation and fund creation at the same time. Mutual fund also provides them with schemes which will provide tax benefits also.