Which mutual fund should I opt for if I want to buy a house?

Thinking about buying your dream home? Whether it is a cozy apartment in the city or a farm house in the suburbs, planning for it is the first big step. And while imagining your perfect home is exciting, turning that dream into reality starts with serious financial planning.

Property prices are on the rise, and buying a house today involves more than just paying for the home itself. There are various costs associated with it like the down payment, registration , home loan EMIs, interiors, and other expenses.

Naturally, one of the first questions people ask is: 'Which mutual fund should I invest in if I want to buy a house?'.

Well, there’s no one-size-fits-all answer. The right mutual fund for you depends on three key things:

• Timeline: Are you planning to buy the house in 2, 5 or 7 years?

• Risk appetite: Can you handle some market ups and downs, or do you need capital safety?

• Budget flexibility: Is your budget fixed?

Purchasing a house is usually a long-term goal, and thus financial planning goes into it ahead of time. Since this is usually a medium-to-long-term goal, the choice of a mutual fund depends on the time period of the target purchase.

If the time window is more than five to seven years, investors can opt for a combination of equity and debt funds. This approach will facilitate the generation of wealth over the long run while hedging against market swings. If the goal is within a shorter time period, then it is advisable to focus on debt-oriented schemes such as short-duration, low-duration, or income funds that ensure capital protection while delivering acceptable returns.