Growth fund and balance fund are 2 different schemes in Mutual fund
sector. Both the schemes have different characteristic but are good
investment option for the investors. In order to know which scheme one
should choose it is necessary to understand both the scheme.
Both the Growth and Balance fund follows asset allocation approach
i.e the fund manager who manages this funds invest in both equity and
debt. However in growth fund large proportion of investment is made in
equity, while in balance fund normally 60% of investment is made in
equity and rest 40% in debt sector. However this proportion can change
which depends on market condition. As in growth large amount of money is
invested in equity it becomes more risky than balance fund.
There is a myth among the people of “Higher the risk, Higher the
return” although this myth is busted by balance fund as in past some
balance fund have given better returns than growth fund and has been
able to provide high return by taking moderate risk.
So the question arises is in which fund one should invest in???
In order to get the answer one should know what is his/her risk
appetite, goals, time horizon and other factors that affects investment
discussion of an individual.
If a person can take high risk and wants to achieve his goals in
short term period it is advisable to invest in Growth fund as this fund
mainly invest in equity it as the potential to provide good return
within short period of time along with high risk. However is a person
what to take moderate risk and wants to achieve his investment goals in a
long run then in such case it is advisable to invest in balance fund.
Both growth and balance fund is a good investment option one can
start an SIP in both the fund and can gain good return. Also it is
advisable to stay invested for long period say 5-7 year in order to
generate good return from the investment.
So start your investments right here and get expert advisory based on your risk ratio appropriate for your portfolio. Click HERE
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