A human life passes through many stages and one needs to be financially prepared to face any of them. From being single to be married and then being a parent which is followed by retirement are the major stages of the life of a commoner. To meet every milestone of life successfully, one needs to plan it well so that one can have a financial support all the times. Knowing the fact, it is advisable to invest our surplus fund rather than keeping our extra money in savings account.
Whenever we invest in any platform, we must invest with a goal. A goal for investment is definitely a financial goal. Such financial goals can sometimes vary from person to person but most of the times they are similar. The financial goals for which most of us invest are like down payment of a home at a particular age, the education expenditure for kids, the retirement corpus, taking a foreign tour etc. The goal of one’s investment depends on the stage of life where he is at present.
When you start at any stage of your life, you must invest in the right investment instrument. The mutual fund comes in many variants and to find the best one for a particular stage can be confusing. Whenever we are to create the perfect portfolio for any life goal we are to take two components into consideration – the first one is the tenure of the investment and the second one is the risk appetite.
Ideal Mutual Fund Portfolios for Every Stage of Life
Wealth Maximizing Portfolio
Such portfolios are designed for the youths who are free from financial responsibilities and ready to take risks on their investments. When you are earning well and have not many responsibilities, it is considered to be the best time to invest in high-risk mutual funds for a high return. Such mutual fund portfolio is created with more investment in the equity funds and less in debt funds. More than 90% of investment is to be done in equities which carry chances to give high returns. One can create such portfolios with a goal of the purchase of a home or car.
The Wealth Building Portfolio
When you reach a stage where you have started taking responsibilities of your spouse or parents, at that time this portfolio will work best for you. Such mutual fund portfolio consists of a high percentage of equity investment and less debt investment but the equity invest in this portfolio is less than the previous portfolio. Here the risk profile has been brought down by investing more in debt funds. The ideal distribution of equity to debt fund can be 85% in equity and the rest in debt fund. In this type of portfolio, more than 50% of the investment is done in large-cap companies which further minimize the risk profile.
The Wealth Stabilizing Portfolio
The persons who are loaded with many financial commitments should create this kind of portfolio for their investment. The risk profile has brought lower here by the equal investment in equity and debt fund. By investing equally the investors can gain reasonable profit without being much exposure to the market volatiles. In this type of investments, just 10% of the investment is done in small-cap companies. The rest of the investment is done in mid-cap and large-cap companies.
Wealth Securing Portfolio
The next portfolio is designed for the ones who want to secure their wealth for a better retirement corpus. The risk profile has to be low when you want to be financially stable and have a big corpus for a safe and secure retirement. Most of the investment here is done at large-cap companies to ensure an average but certain return. The combination of such type of portfolio is made by an unequal division of ELSS, hybrid fund and short-term debt funds.
The Regular Income Portfolio
If you are a retired person and want to have a regular income then this portfolio is the ideal for you. The mutual fund investment done in this type of portfolio consists of only 5% of equity investment and 95% of debt financing. This type of investment is more convenient at this stage as the returns are more than the bank’s savings account along with the tax savings. A regular income investment portfolio invests most of your money in debt funds and chooses systematic withdrawal plans to e regular income. Such investments are the best way to manage your personal finance during the retirement period as the mutual fund returns may be comparatively less but it is certain.
It is neither too early to invest nor too late to invest in mutual funds. Anyone at any stage of life can start investing in mutual funds. Mutual fund investment is so versatile that it can create wealth as well as generate regular income at the same time.