Every Diwali, you give your family and friends gifts that delight them. This Diwali, why not give your loved ones the gift of financial security through mutual funds? While cash, gold, and fixed deposits are generous financial gifts, a mutual fund investment can prove to be even more beneficial.
Although mutual fund units are non-transferable, you can still gift a loved one a mutual fund. You can set a goal, create a mutual fund in your name, redeem the units once you reach your goal, and then gift the corpus to your loved ones.
For whom are mutual funds suitable gifts?
A mutual fund investment makes a generous gift for young people, and here is why. Mutual funds have the potential to grow exponentially, creating wealth for your children that they can use as they progress. The long-term returns are much higher than those of fixed deposits, so when your child comes of age, he will have enough corpus to fund his education, build a house, or buy a dream car.
So, if you want to gift someone a mutual fund this Diwali, you can start an SIP in your name and transfer money to them at a later date.
Know your investment goal
You should always know your goals before investing in mutual funds. With Tata Capital’s Moneyfy app, you can choose mutual fund options based on your financial goals and risk profile.
For instance, suppose your goal is to fund the education of your loved ones. With Moneyfy, you can create your goal, enter the amount you wish to save, and the time for which you want to save. You also have the option to decide if you want to invest a lumpsum amount, or start an SIP.
Using this information, the app will calculate how much money you need to invest to achieve your goal, and suggest you a combination of mutual fund schemes to choose from.
You can use this feature for pre-listed goals such as wealth creation, education, travel, wedding or create your own custom goal.
Additional Read: Which Mutual funds to Invest in For Long Term Growth?
Points to remember before investing
When you start a mutual fund investment for someone, you must consider the following:
- The objective of your fund: Decide your investment goal, and then research and compare funds. Make sure you observe the investment strategy and asset allocation. If you are risk-averse, then explore debt-oriented funds.
- Note the exit load and expense ratio: Remember that you will have to pay an annual expense ratio for all mutual funds. Additionally, you need to pay exit load charges while redeeming the fund units.
- Taxation benefits: You can choose an ELSS mutual fund (Equity Linked Savings Scheme) to avail of tax benefits.
- Lock-in period: A lock-in period means that cannot redeem any mutual fund units during that time. So, before you invest on behalf of someone, check the lock-in period of the mutual fund.
Additional Read: Smart Ways to Invest Your Diwali Bonus
Do you have an investment goal in mind? Let us help you achieve it. Download Tata Capital’s Moneyfy app and receive mutual fund recommendations tailored to your risk profile. So make this Diwali special, and start investing!