Why You Should Invest in Balanced Funds

While most people like to save their money for rainy days, that aren’t entirely sure of how to make sure they have enough money when that rainy day rolls around. Most people prefer security and aren’t too thrilled with dealing with unknowns, which is why Fixed Deposits are the most common way Indians like to save their money. However, with inflation going through the roof recently, people have realized that they need a way to make their savings work for them. The safe fixed deposits with their low returns aren’t going to cut it for those people saving for their children’s education and wedding, and their own retirement. The desperate need to save more money than possible has led to the growing popularity of investments in India.

Balanced/Hybrid Mutual Fund

Investments are still a bit of a gamble, and most people lean towards putting their money in Mutual Funds. These funds pool together money from numerous investors and then a market expert invests the money for them. As safety goes, mutual funds are seen as the safest, but coming a close second are balanced funds, also known as equity-oriented hybrid funds. These funds have a very low risk factor and are perfect for first-time investors who aren’t sure what their risk-appetite really is. The funds also invest over 65% of funds in equity, and this gives investor certain tax benefits as well, making it all the more beneficial. People who are looking to invest for the first time, can try putting their money in balanced mutual funds by adopting an SIP route. It is preferable to invest money when the market is at a low, so you can reap higher benefits when the market rises.

Over the past year, equity and debt market funds were found to be volatile, and did not provide very high returns. While balanced funds on the other hand performed better than some mid-cap and large-cap funds in certain cases. While your financial goals will obviously dictate how you invest your money, it is a good idea to fully understand the investment before you make one.