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Solutions-Oriented Schemes:10 Things You Should Know Before Investing


Solution-oriented mutual funds make it easier to invest for long-term wealth preservation or growth, such as for retirement, marriage, or children's education. These funds have paved the way for simple financial planning of complicated long-term goals that may or may not require strategy changes over time. Investors' financial goals, projected returns, and risk appetite is all taken into account by fund managers of solution-oriented schemes in order to construct a portfolio that generates the maximum yields in line with their expectations. A solution-oriented fund's fund management is free to replenish the portfolio with equity or debt tools and to adjust the strategy for investors of different ages.

Solutions-Oriented Schemes:10 Things You Should Know Before Investing

Things you should know about the Solutions-Oriented Schemes:

  1. Solution-Oriented Schemes are one of the five kinds of mutual funds classified by the SEBI (Securities and Exchange Board of India), and they allow investors to create customized portfolios for a specific investment goal.
  2. Because the investing goal is long-term, solution-oriented funds frequently include a five-year lock-in period to entice investors to commit for a longer period of time.
  3. The portfolios of Solution-Oriented Scheme funds might be equity, debt, or hybrid in type.
  4. The vast majority of programs in this category are closed-ended. Open-ended schemes, on the other hand, are issued by some fund companies.
  5. A set monthly income can be obtained from the accumulated corpus via an SWP (systematic withdrawal plans).
  6. Some of these solution-oriented plans also qualify for a Section 80C tax deduction.
  7. Retirement planning mutual funds and children's gift mutual funds are two popular solution-oriented mutual funds.
  8. The duration of investment in solution-oriented funds must be long enough for the investments to grow. Because the investing aim is long-term, the majority of the schemes in this category include a lock-in period.
  9. Mutual funds that are solution-oriented are mechanized to achieve a certain aim. These funds' portfolios are constructed in such a way that the investor does not need to participate in any other scheme to achieve the same goal.
  10. Longer investment tenure reduces risk, however, solution-oriented funds' results are susceptible to market risk, and high returns are not guaranteed.

Story first published: Thursday, January 13, 2022, 19:54 [IST]
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