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Ramalingam Kalirajan |9789 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Santosh on Nov 23, 2023Hindi

Hi Dev, I,m a defence pensioner and 60 years old. I want to invest Rs 5 lakhs in MF for a duration of 1-3 years, please advise which MF will be better for me. Thanks

Ans: Given your investment horizon of 1-3 years and considering your age and risk profile, it's essential to prioritize capital preservation while aiming for modest returns. Here are some mutual fund options that may suit your investment needs:

Short-Term Debt Funds: These funds invest in fixed-income securities with relatively shorter maturities, providing stability and liquidity. They are suitable for investors looking to preserve capital while generating better returns than traditional savings accounts or fixed deposits. Consider investing in reputable short-term debt funds with a track record of delivering consistent returns and maintaining low volatility.
Liquid Funds: Liquid funds invest in short-term money market instruments with very high liquidity and minimal interest rate risk. They offer stability of capital and can be an excellent option for parking funds temporarily or meeting short-term financial goals. Liquid funds typically have a low expense ratio and can provide relatively higher returns compared to savings accounts or fixed deposits.
Ultra Short Duration Funds: These funds invest in fixed-income securities with short to ultra-short maturities, offering a balance between stability and yield. They can be suitable for investors with a slightly longer investment horizon of 1-3 years who are willing to take on slightly higher risk for potentially higher returns than traditional fixed deposits or savings accounts.
Arbitrage Funds: Arbitrage funds aim to generate returns by exploiting price differentials between cash and derivative markets. They offer relatively low volatility and tax-efficient returns, making them suitable for short-term investments. However, it's essential to note that arbitrage funds are subject to market risks and may not guarantee fixed returns.
Before making any investment decisions, it's advisable to consult with a certified financial planner or investment advisor who can assess your financial goals, risk tolerance, and investment horizon. They can help you select mutual funds that align with your investment objectives and provide personalized guidance based on your unique financial situation. Additionally, carefully review the fund's investment objectives, past performance, expense ratio, and risk factors before investing.

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