Investment Planning with Mutual Funds
As per current mutual funds investors records, 84% invests for Supplement retirement income, 26% for children education expenses, 9% for supplement current living expenses and 7% to buy home or other expenses.
i. Education: Parents can use mutual funds to invest for children's college education expenses. Time horizon plays a vital role while investing for children. If one starts when a child is born, 18 years of time horizon is expected but one may lengthen by investing before the birth of child.
ii. Emergency Reserves: There are unexpected moments in life when one needs money at short notice of time. Money market funds alone, or in combination with short-term bond funds, can also be appropriate investments for other short-term goals.
iii. Retirement: Most individuals buy mutual funds for long-term goals, especially retirement. It is estimated that retirees will need 70 to 80 percent of their final, pre-tax income to maintain a comfortable lifestyle in retirement. If you plan to retire at age 65, retirement savings should last for at least 17 years, since the average life expectancy for a 65-year-old is 82. If you're 25, you've enough time horizon (40yrs.) to invest but if you start at 45, and expects to retire at 60, then your time horizon will be 15 yrs. So start planning about retirement as soon as possible.
iv. Tax Benefits: Some investors choose mutual funds to get tax rebate on their investments. While the money safely grows, it also allows investors to save a big amount of their income.
No comments:
Post a Comment