Are Mutual Funds ideal for short term or long term Investment?
“Mutual Funds could be a good saving tool for short term.”
“You must be patient with your Mutual Fund investments. It takes time to deliver results.”
People regularly come across both the above statements, which are clearly contradictory.
So what period are Mutual Funds suitable for? Short term or long term?
Well, that depends on what one’s investment goals are, and most goals are driven by time. There are schemes suitable for short periods, there are several schemes suitable for longer horizon, and then, there are schemes for any period in-between.
Consult your Mutual Fund distributor or your investment advisor, discuss your financial goals, and then decide where you want to invest. For example;
1. Equity-oriented Mutual Funds- Look for longer periods, typically 5 years and above.
2. Fixed Income oriented Mutual Funds-
1. Liquid Funds - For very short term – Less than 1 year
2. Short Term Bond Funds – For the medium term – 1 to 3 years.
3. Long Term Bond Funds - For the long term – 3 years or more
As you explore our website, you will know more about the various kinds of Mutual Funds too. Your mutual fund distributor/investment advisor can also help you identify the right type of MF to invest in as per your goals!