The investment in mutual funds like other investment instruments should solely be based on your financial goals, risk appetite and investment horizon. And now when the stock markets has corrected sharply together with other global geo-political concerns as well as depreciating Indian currency, you may be in for a doubt whether mutual funds which reaps you gain based on market sentiments should be delved in at this time or not.
So, as a conservative or an individual with moderate risk appetite here are few mutual fund options that enable you to meet both your short term financial goals and at the same time are not too risky.
1. Equity Savings Funds:
Equity savings fund is a mutual fund type which is suitable for investors with moderate risk appetite and who wants to reap dual benefits of capital appreciation from equity and regular income stream.
The equity savings scheme invest 1/3 rd of the fund amount in fixed income instruments, 1/3rd in equity mix and the remaining in arbitrage. Here an investor can invest a lump sum amount and a minimum time frame of three years should be taken into account when investing in Equity savings funds.
Know more in detail about this mutual fund option here.
2. Liquid funds:
These funds are also being promoted given the savings account rate that has declined across banks. The funds divert funds in short term instruments such as treasury bills, government securities that have a maximum maturity of 90 days time. And are capable of rewarding you with gains of nearly 6-7%.
Further short term capital gain applies in case they are held for less than 3 years and if held for over 3 years LTCG tax @ 20% with indexation benefit is applicable. These funds can be maintained with a minimum horizon of 1 month or above.
3. Arbitrage Funds:
These funds take advantage of price differential in cash and derivatives segment. So, investors with a horizon of one month or more can consider investment into arbitrage funds and reap close to 6% return on an annual basis. These funds after one year in investment do not arise capital gains tax implications.