Mutual funds are one of the most popular investment tools in the country. They have been around for a long time and have evolved over time. Mutual funds are managed by professional mutual fund managers who invest the money of investors into various stocks, bonds, real estate, and other assets to generate returns for them.
Mutual funds are also referred to as collective investment schemes as they pool money from investors and invest it into various assets.
Best Mutual Funds to Invest for 3-4 Years
If you’re looking for mutual funds that have performed well over the past year or two, then one option is to look at our best mutual funds lists. Here are a few of them:
S.No. | Fund Name |
1. | Franklin India Short Term Income Plan – Direct Plan-Growth |
2. | Edelweiss Banking and PSU Debt Fund – Direct Plan-Growth |
3. | Nippon India Short Term Fund – Growth |
4. | IDFC Bond Fund – Short Term Plan Regular Plan-Growth |
5. | Edelweiss Banking and PSU Debt Fund |
6. | ICICI Prudential Short Term Fund – Direct Plan-Growth |
7. | |
8. | Aditya Birla Sun Life Short Term Fund – Direct Plan-Growth |
9 | IDBI Short Term Bond Growth |
10. |
Factors to Consider Before Choosing Mutual Funds to Invest for 3-4 Years
Mutual funds are an ideal way to invest in the market. It is easy, convenient, and cost-effective. They provide a great way to diversify your investments and take advantage of the market’s growth.
However, there are some factors that you need to consider before choosing to invest in mutual funds. These factors include:
Investment Objective
An investment objective is what you expect to achieve by investing. The investment objective of a mutual fund should be clearly understood by the investor before investing.
This is because it will help you to decide on your preferred fund category and also allow you to evaluate the performance of your mutual fund in relation to its objective. It is also important for you to understand how the fund would make use of your investment money and whether it will meet your financial goals or not.
Time Horizon
You should also consider how long you plan on holding onto this investment—your time horizon. If it’s a short-term investment, one with a shorter time horizon, then you’ll want to look into high-yield options like liquid funds and ultra short-term funds; these types of funds typically have lower risk profiles and higher returns than other types.
However, if your goal is long-term investing (five years or more), then you’ll want to look into low-risk options such as balanced funds and debt funds; they offer lower returns, but they’re less volatile than other types of investments and have been shown to have better performance over time periods longer than five years.
Risk Tolerance
Risk tolerance is another important factor that every investor must consider before investing in any financial product. Risk tolerance refers to how much risk a person is willing to take on their investments.
Risk tolerance varies from person to person and can vary depending on factors such as age and income level as well as personal preferences.
Fund Performance
The first thing to look at when choosing a mutual fund is its performance. The performance of a fund is measured by how it has performed over time compared to other funds.
You should also look at the past one or two years of returns, as that will give you an idea of how the fund has performed recently. You can get this information from your financial advisor or by visiting the company’s website.
Net Asset Value (NAV)
Another important factor to consider when choosing a mutual fund is its net asset value (NAV). The net asset value (NAV) is an important measure of how much money you have invested in your mutual fund.
It is calculated by subtracting all liabilities from all assets, including any fees or charges paid by investors as well as any distributions made by the fund manager during its lifetime.
A high NAV indicates that there is more money available for investors, while a low NAV indicates that there is less money available for investors due to fees or charges paid out by managers during their lifetime investment period(s).
AMC Performance
Another factor that should be considered when choosing a mutual fund is its AMC performance.
AMC performance refers to how well an AMC manages their investments; this is usually reflected in their track record over time as well as their ability to keep costs low for investors (which reduces tax burdens).
Expense Ratio
This is the percentage rate charged by an investment company for managing assets on behalf of its clients.
The expense ratio can be found on every prospectus for each mutual fund available for purchase through brokerages or directly from companies themselves via websites that track this information for investors who want more information about what fees they’re paying before making any investment.
Top Mutual Funds to Invest for 3-4 Years
If you’re looking for mutual funds that have performed well over the past year or two, then one option is to look at our best mutual funds lists. Here are a few of the top mutual funds with overview-
1) Franklin India Short Term Income Plan – Direct Plan-Growth
Franklin India Short Term Income Plan – Direct Plan-Growth (FISDINSI) is a debt mutual fund scheme. It invests in fixed-income instruments, including treasury bills, commercial papers, and bonds.
The investment objective of the scheme is to generate regular income through an active portfolio management approach.
It aims to provide a return of income on your investment in the medium term. The investment objective of the scheme is to generate returns primarily through regular income from debt securities.
2) Edelweiss Banking and PSU Debt Fund – Direct Plan-Growth
The Edelweiss Banking and PSU Debt Fund – Direct Plan-Growth is an equity mutual fund scheme. It invests in equity and debt instruments of companies with a focus on banking and financial services, insurance, and power sectors.
The scheme is managed by Edelweiss Mutual Fund House. It was launched on 30-Sep-2013 and is benchmarked against NIFTY Banking and PSU Debt Index.
3) Nippon India Short Term Fund – Growth
Nippon India Short Term Fund – Growth is a mutual fund that invests in debt and money market instruments of the Indian government and corporations.
The fund invests in debt securities issued by the government and corporate bodies in India. It invests mainly in short-term debt securities, with maturities ranging from 1 year to less than 3 years.
4) ICICI Prudential Short Term Fund – Direct Plan-Growth
The ICICI Prudential Short Term Fund – Direct Plan-Growth is a mutual fund scheme that invests in debt and money market instruments. The target maturity of the fund is less than one year.
The fund has been designed for investors who wish to invest in debt and money market instruments for short-term goals. It also allows investors to benefit from the lower volatility associated with short-term investments.
5) Aditya Birla Sun Life Short Term Fund – Direct Plan-Growth
Aditya Birla Sun Life Short Term Fund – Direct Plan-Growth is a great option for investors who are looking to invest in mutual funds for a short time.
The investment objective of this fund is to generate income through investments in debt and money market instruments.
The scheme invests in fixed-income securities, including government securities (G-Secs), corporate bonds, bank fixed deposits (FDs), and commercial papers (CPs).
Conclusion
It is always important to choose the right mutual fund before your investment. When you invest your money, it might take a few years, or even more, for your invested funds to multiply, depending on when you get back your investment.
It is important to carefully pick the right Mutual Fund scheme in order to take advantage of its growth potential within a certain period of time.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
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Research Analyst - Himanshu Sinha
When it comes to mutual funds, I've delved deep into their workings and dynamics, assessing various strategies and analyzing their historical performances. I've engaged with market trends, dissected fund structures, and tracked the maneuvers of professional fund managers to understand their decision-making processes. My expertise stems from firsthand experience, poring over financial data, observing market shifts, and comprehensively evaluating investment tools like mutual funds.
Mutual funds are collective investment schemes managed by seasoned professionals. These funds pool money from investors and distribute it across diverse assets like stocks, bonds, real estate, and others to generate returns. The article touches upon key aspects essential for understanding mutual funds:
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Types of Mutual Funds: It highlights various categories, such as debt funds like Franklin India Short Term Income Plan and Nippon India Short Term Fund, emphasizing their investment objectives and portfolio compositions.
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Factors for Selection: The piece stresses crucial factors for choosing the right fund, including investment objectives, time horizon, risk tolerance, fund performance, Net Asset Value (NAV), Asset Management Company (AMC) performance, and expense ratios.
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Time Horizon and Risk Tolerance: It delineates how different timeframes (short-term versus long-term) influence the choice of funds and their associated risks and returns.
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Top Performing Funds: It lists specific mutual funds like Edelweiss Banking and PSU Debt Fund and ICICI Prudential Short Term Fund, detailing their investment focus, target maturity, and sectors they emphasize.
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Conclusion and Disclaimer: Emphasizes the importance of carefully selecting the right mutual fund and underscores the necessity of understanding growth potential and associated risks. The disclaimer clarifies that the information provided is for educational purposes and not a recommendation.
This comprehensive overview covers the gamut of essential concepts: fund types, selection criteria, top performers, and the significance of careful consideration and due diligence in mutual fund investments.
