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.
Things you should know about the Solutions-Oriented Schemes:
- 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.
- 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.
- The portfolios of Solution-Oriented Scheme funds might be equity, debt, or hybrid in type.
- The vast majority of programs in this category are closed-ended. Open-ended schemes, on the other hand, are issued by some fund companies.
- A set monthly income can be obtained from the accumulated corpus via an SWP (systematic withdrawal plans).
- Some of these solution-oriented plans also qualify for a Section 80C tax deduction.
- Retirement planning mutual funds and children’s gift mutual funds are two popular solution-oriented mutual funds.
- 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.
- 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.
- Longer investment tenure reduces risk, however, solution-oriented funds’ results are susceptible to market risk, and high returns are not guaranteed.
For investment related articles, business news and mutual fund advise
You have already subscribed
Story first published: Thursday, January 13, 2022, 19:54 [IST]
Original news source Credit: www.goodreturns.in