Mutual Fund vs Stock Market: DECODED! Which investment option will help you meet all kinds of long-term investment goal?
Mutual Fund vs Stock Market: While finalising an investment plan for a long-term goal, keeping an idea about the rise in inflation during the investment period is a must.
Mutual Fund vs Stock Market: While finalising an investment plan for a long-term goal, keeping an idea about the rise in inflation during the investment period is a must. As per the tax and investment experts, different investment goals will have different inflation. For example, if the investment is for educational purposes, then the inflation has to be kept in the range of 10-12 per cent while for the health purpose, inflation would be in the range of 8-10 per cent. However, for normal long-term investment goals like marriage of the daughter, retirement fund, etc, inflation is kept at around 5-6 per cent.
Speaking on the role of inflation while deciding an investment tool that can help an investor meet one's long-term investment goal SEBI registered tax and investment expert Manikaran Singhal said, "In normal circumstances, inflation is kept at around 5-6 per cent per annum for meeting the long-term investment goal like retirement fund creation, marriage of daughter, etc. It helps a person to know how much money would be required to meet the long-term investment goal and for that how much investment will be enough at current times."
Suggesting investors to segregate one's investment in normal goal, educational goal dn health related goals, another SEBI registered tax and investment expert Jitendra Solanki said, "For an investment that aims to meet a long-term educational goal, inflation is kept at around 10-12 per cent while for the health related long-term investment goal, inflation is considered rising at 8-10 per cent."
See Zee Business Live TV streaming below:
"One has to be clear about one's purpose of investment and the money required to start the investment. If the investor is well aware about one's investment goal, it becomes easier for him or her to start an investment with a proper required fund and meet one's long-term investment goal," concluded Jitendra solanki.
Asked about the investment tool suitable for meeting one's long-term investment goal Manikaran Singhal said, "For normal retirement fund or marriage of daughter, etc. purposes, one has to choose an investment tool that yields higher than 5-6 per cent per annum. For such investors, if their risk appetite is low, they can choose central government backed small saving schemes like PPF, Post Office Scheme, etc. where one can get above 6 per cent annual interest on one's investment." Singhal said that debt mutual funds can also be a better option for such investors as it yields around 8 per cent per annum.
However, for meeting long-term education and health related investment goals, such tools won't be enough. For such long-term investment goals, one will have to increase one's risk appetite and go for the equity mutual funds, said Solanki adding, "Equity mutual funds in long-term yields at least 12 per cent and hence to meet any kind of long-term investment goal, equity mutual fund is the best investment tool." He said that direct stock market investment will also yield more but it's not advisable for the first time investors. One can go for the direct stock market investment after getting proper pros and cons of the stock market because the risk appetite of an investor investing in stock market has to be at highest levels.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.