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Introduction
Big purchases—like buying a car, planning a wedding, or going on an international trip—can put a strain on your finances if not planned properly. Rather than relying on loans or last-minute savings, mutual funds offer a structured way to build up the required amount over time.
Let’s see how mutual funds can make your dreams affordable—and achievable—with a simple real-life example.
20/06/2025
It depends on your time horizon:
Less than 1 year
Use Liquid Funds or Ultra Short-Term Debt Funds
Goal: Safety and quick liquidity with modest returns (5–6%)
1–3 years
Opt for Short Duration Debt Funds or Low Duration Funds
Goal: Moderate growth with controlled risk (6–7%)
3–5 years
Choose Hybrid Funds or Aggressive Hybrid Funds
Goal: Balance between growth and stability (8–10%)
5+ years
Invest in Flexi Cap, Large & Mid Cap, or Index Funds
Goal: Maximize growth for long-term value (10–12%)
Real-Life Example: Rahul’s Dream Car
Rahul, 32, wanted to buy a ₹10 lakh car in 4 years. He didn’t want a loan. He started a ₹15,000/month SIP in an aggressive hybrid fund with a 9.5% CAGR expectation. After 4 years, his investment grew to ₹8.1 lakhs. He added ₹1.9 lakhs from his bonus and bought the car outright—no EMI, no debt, just planning!
Key Takeaways
| Time Horizon | Recommended Fund Type | Risk Level | Suitable For |
|---|---|---|---|
| < 1 year | Liquid, Ultra Short-Term Debt | Low | Emergency or quick-use funds |
| 1-3 years | Short Duration, Low Duration Debt | Low-Med | Wedding, vacation |
| 3-5 years | Aggressive Hybrid, Balanced Advantage | Medium | Car, home interiors |
| 5+ years | Flexi Cap, Large & Mid Cap, Index | Medium-High | Down payment for home, luxury buys |
Conclusion
Big purchases don’t have to derail your finances. With proper planning and the right mutual fund strategy, you can afford your goals—without stress.
Dr. Satish Vadapalli
Research Analyst
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