Financial Planning — Mutual Fund Term Explained

The process of assessing income, expenses, goals and time horizons to create an investment strategy. Mutual funds are typically key instruments.

Financial planning involves analysing your current financial situation, defining your goals (retirement, education, home), and creating a strategy to achieve them using appropriate investment vehicles.

Mutual funds — across equity, debt and hybrid categories — are typically the primary instruments for implementing a financial plan.

Related terms

• Goal-Based Investing — Linking each investment to a specific financial goal with its own timeline, risk level and suitable fund.
• Asset Allocation — How you distribute investments across asset classes — equity, debt, gold. The single biggest factor in long-term portfolio returns and risk.
• SIP (Systematic Investment Plan) — Investing a fixed amount in a mutual fund at regular intervals — typically monthly. Builds discipline and uses rupee cost averaging to reduce timing risk.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.