Want to create wealth for the long term? Here are some worthy mutual fund considerations

Mutual funds are one of the most effective long-term wealth-creation vehicles. In this post, we discuss the finest mutual funds for long-term wealth growth. So, keep an eye out!

The equity mutual funds have had a record influx. In March 2022, net inflows into equity mutual funds increased by almost 44 per cent. This might be due to crude oil prices maintaining stability and Foreign Institutional Investors (FII) slowing their selling pace despite persistent geopolitical worries. The Association of Mutual Funds in India (AMFI) reported that net inflows into equity mutual funds totalled Rs 28,463.49 crore in March 2022, up from Rs 19,705.27 crore the previous month.

Now when it comes to wealth creation, keeping your expectations right is very important and even before that, it is important to know what wealth actually means. In simpler terms, wealth is nothing but those extra bucks that you make after accounting for inflation. And as we all know at present the situation of inflation is worst not only in India but globally as well. Do remember that inflation is a wealth destroyer. Hence, we feel any return that you earn above the inflation with a 2 per cent margin of safety is wealth.

For example, if our inflation rate is about 7 per cent, and you invest in bank fixed deposits (FDs) that pay just 6 per cent to 6.5 per cent, you will not be able to generate wealth. In reality, a negative real rate of return is destroying your wealth. And if you merely invest in debt mutual funds that provide yields of 7 per cent to 8 per cent, you are neither building nor destroying wealth. However, if you invest in a decent combination of equity and Debt Funds that provide returns of 10 per cent to 12 per cent, you are unquestionably accumulating wealth.

So, in order to build a fortune, you do not need to accept risks that are more than your actual risk tolerance level. Below we have listed the top five funds for wealth creation over the long term.