Jul 19, 2017 3 min read

Why Balanced Fund Should be a Part of Your Portfolio?

Wondering to invest in a safe investment plan? Balanced funds are for you! Know how.
If you’re looking to diversify your funds, mutual funds are the best place to start from. The balanced mutual funds are in fact an excellent addition to your portfolio to provide you with resounding benefits and earnings over a period of time. The investor who takes the equity position through balanced funds tends to realise the equity growth potential with lower fund volatility.

Let’s evaluate the major reasons due to which balanced funds are considered must-have plans for a sound portfolio.

  • Benefits of Asset Allocation 
    To avail the benefits of equity investments with a cushion of debt instruments, the balanced schemes are often recommended by the experts. They are essentially equity-oriented funds, but the fixed income exposure due to the debt mutual funds tends to reduce volatility and in turn, extends and complement the equity returns. In case, the market makes a sudden fall and the equities get undervalued, the portfolio of balanced funds will be less affected as compared to the pure equity funds. Accordingly, they are the best option for the investors who are seeking low-risk funds for high growth in capital.
  • Benefits of Taxation 
    Taxation is one of the major reasons which makes balanced funds quite favourable to the investors and a very attractive investment avenue. Although these plans have debt proportion, the equity-oriented schemes are taxed as per the rules applicable to the equity funds. That is, 15% tax is charged in case of the short-term capital gains while for long term gains, i.e., if investments are redeemed after one year, no tax is levied. Accordingly, the investors gain the advantage of zero taxation if they hold the schemes for a longer tenure.
  • Investment Tenure 
    Although there are no restrictions on redeeming the mutual fund schemes whenever one requires, these funds are most suitable for saving money toward accomplishing a long-term investment goal. The investors who wish to park their capital for a period ranging from three to thirty years must consider the balanced schemes for their portfolio.

Who Should Invest in Them?

Investors who are new to the equity investing should start off with the balanced funds as they are considered to be the safest investment avenue to begin investing. It is also advisable to the investors who are in their retir which will help you in gaining appreciation and regular income over a period of time.ement phase and have a high-risk appetite to get equity exposure through the equity-oriented balanced funds.

An investment made in the balanced mutual funds are done to get the benefits of both the worlds as it is a mix of equities and debts. One not only earns capital appreciation but also fetches the advantage of earning regular returns in the form of interest income. The entire responsibility of managing the fund through market timings and asset allocation is held by the fund managers who are the experts in their domain. However, it is a must for every investor to keep a track on the performance of the funds in which they have invested their hard-earned money.

Choosing a Fund for Your Portfolio

Picking up a balanced fund for one’s portfolio is easier said than done. Making a comparison between different schemes falling in this category is quite difficult because of a little variation in the portfolio concentration. The investment strategies of the fund manager for equity and fixed income plan also differ. So, it is a must to go through the individual analysis of the fund and make a choice according to the requirements and individual goals.

MySIPonline provides you with the ease of investing in the best-performing balanced fund schemes which will help you in gaining appreciation and regular income over a period of time. You must get associated with us to make a filthy rich investment portfolio.