Secure Your Future: How Salaried Individuals Can Build Wealth with Mutual Funds
30 August, 2024
Synopsis
Mutual funds offer salaried individuals a flexible way to build wealth over time. This investment instrument allows them to invest regularly from salary and variable sources like bonuses.
Key mutual fund options for salaried individuals include Equity Linked Savings Scheme (ELSS), Large Cap Funds, and Balanced Advantage Funds, each tailored to different financial objectives and risk profiles.
Salaried investors should carefully assess their risk appetite, investment horizon, and financial objectives before selecting mutual funds.
HDFC Bank SmartWealth App is a smart way to get personalised recommendations.
Mutual funds are a window of opportunity for salaried individuals to realise their dreams by creating wealth over a long period. Salaried employees have to manage their household with a limited salary and thus are left with a limited investible surplus after their fixed monthly expenditure. Thus, the salaried class needs an investment option that allows the flexibility of making even small investments and the leeway to skip investments in case of emergency. Mutual funds fulfil all these criteria and are thus considered ideal for salaried individuals to create wealth with disciplined regular investments over a period of time.
On the other hand, mutual funds also allow the salaried class to use the variable component of their salary—increments, bonuses, or performance-based incentives—to top up their investments. For the salaried individuals who starts investing early in their careers—will allows them to leverage the power of compounding in mutual funds to grow wealth over the years.
However, to realise mutual funds' full potential, investments must be made after careful planning, and limited resources should be allocated strategically.
Mutual funds allow you to invest in a professionally managed diversified portfolio covering a basket of assets such as stocks, bonds, commodities, etc. The diversity helps in risk reduction. However, for salaried investors, selecting the right mutual funds requires careful analysis of multiple factors.
Here’s a list of types of mutual funds for salaried individuals.
List of Best Mutual Funds for Salaried Individual
Here are some of the best mutual fund options for salaried individuals to consider:
Mutual Fund Option | Mutual Fund Scheme Description | Benefits for Salaried Individual |
Equity Linked Savings Scheme (ELSS) | ELSS funds are equity-oriented mutual funds that offer tax benefits under Section 80C of the Income Tax Act. They have a lock-in period of 3 years. | ELSS funds provide the dual advantage of potentially high returns from equity investments and tax savings of up to ₹1.5 lakh per year. This makes them an attractive option for salaried individuals looking to optimize their tax planning while investing for long-term growth. |
Large Cap Funds | Large cap funds invest primarily in well-established, blue-chip companies with a proven track record of performance and stability. | These funds offer a relatively lower risk profile compared to other equity funds, making them suitable for salaried investors who prioritise stability and consistent returns over the long term. Large cap funds can form the core of a salaried individual's investment portfolio, providing a foundation for steady wealth accumulation. |
Balanced Advantage Funds | Balanced Advantage Funds dynamically allocate their investments between equity and debt instruments based on prevailing market conditions. They aim to optimize returns while managing risk. | For salaried investors who are risk-averse but still want to participate in the growth potential of equities, Balanced Advantage Funds offer a suitable solution. These funds automatically adjust their asset allocation, reducing the need for constant monitoring and rebalancing by the investor. This makes them a convenient option for salaried individuals who may not have the time or expertise to actively manage their investments. |
Salaried employees have various good mutual fund options across market caps and asset classes. Ensure you assess your risk appetite, investment horizon and investment objectives before selecting funds.
As a salaried individual, you can set your investment objective in HDFC Bank SmartWealth App. It will give you a list of mutual fund schemes based on your risk and financial objective. You can download the HDFC Bank SmartWealth App for seamless investing with experts.
Disclaimer: This communication has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. HDFC Bank Limited ("HDFC Bank") does not warrant its completeness and accuracy. This information is not intended as an offer or solicitation for the purchase or sale of any financial instrument / units of Mutual Fund. Recipients of this information should rely on their own investigations and take their own professional advice. Neither HDFC Bank nor any of its employees shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material. HDFC Bank and its affiliates, officers, directors, key managerial persons and employees, including persons involved in the preparation or issuance of this material may, from time to time, have investments / positions in Mutual Funds / schemes referred in the document. HDFC Bank may at any time solicit or provide commercial banking, credit or other services to the Mutual Funds / AMCs referred to herein.
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