The gig economy is growing fast. Increasingly, people are working as freelancers, part-timers, or in short-term contracts. While this gives freedom and flexibility, it also brings challenges. One big challenge is money management. Without a fixed monthly salary, it can be hard to save, invest, or plan for the future. But don’t worry. Mutual funds can help.
Mutual funds are an excellent means by which freelancers can save, grow their funds, and plan for the future, such as retirement. In this blog, we will explain all that you need to know about mutual funds for freelancers in plain language.
Table of Contents
Why Mutual Funds Are Suitable for Freelancers
Freelancers and gig workers do not receive the same pay each month. That is why they require an investment option that is flexible. Mutual funds are ideal because:
- You can start with little money
- You can add more when you earn more
- Your money is managed by professionals
- You don’t need to monitor the stock market yourself
Whether you are saving for a rainy day, tax deferment, or your retirement, mutual funds have something for everyone.
What Is SIP and Why It Help
SIP is short for Systematic Investment Plan. It is where you invest a fixed amount regularly, such as monthly. SIP is wonderful for freelancers because.
- You can begin with as little as INR 500
- It creates a savings habit
- It is effective even if you put small amounts continuously
- You can suspend and resume when necessary
This is SIP for self-employed individuals. Flexible SIP is now being offered by several mutual fund houses, so that you can switch the amount as well as dates if your income varies.
Top Mutual Funds for Freelancers
There are various types of mutual funds. Some mutual funds can be a good option for short-term savings, some for tax savings, and some for retirement. Here are a few that you can consider:
- ELSS Funds: They are also referred to as tax-saving mutual funds. You can claim a tax deduction when you invest in them. They also make you wealthier.
- Hybrid or Balanced Funds: These invest in equities and bonds. So, you receive both safety and growth.
- Debt Funds: They are less risky and provide lower but regular returns. It can be suitable for conservative investors who are not willing to take risks.
- Index Funds: These track the stock market and are cheap. Perfect if you’re willing to invest long-term.
How to Invest When You Earn Irregularly
This is where irregular income investing helps. If you don’t earn the same amount every month, here’s what you do:
- Save more in months with high income
- Use flexible SIPs to modify your amount
- Develop a habit of investing something every month, even if it’s little
Missing one month is okay. It’s just important that you resume when you can.
Saving Tax as a Freelancer
When you’re a freelancer, you’ll end up paying a lot of tax if you don’t plan. One smart move is to invest in tax-saving funds such as ELSS. You can save up to ₹1.5 lakh under Section 80C of the Income Tax Act.
This not only saves your tax but also increases your money.
Emergency Funds for Freelancers
Emergencies can occur at any moment. For freelancers, having money in reserve is essential. Utilise debt mutual funds or ultra-short-term funds for this purpose. These are more secure and enable you to withdraw money immediately.
Attempt to keep 3 to 6 months of your average monthly expenses in this emergency fund.
SIP Automation for Self-Employed People
Most mutual fund apps have SIP automation today. That is, the money is automatically debited from your bank account every month. You don’t need to recall it. This creates financial discipline among gig workers.
You can use Groww, Paytm Money, or ETMoney apps. These are simple and enable you to track your money.
Recurring Deposits vs SIP
Most people are familiar with recurring deposits (RDs). However, SIPs in mutual funds tend to provide better returns. Whereas RDs are fixed and secure, SIPs can increase more in the long run. If you want to accumulate wealth, SIPs are generally preferable.
Planning for Retirement
Freelancers do not receive a pension. Therefore, you have to plan your retirement. Two good ways are given below:
- NPS for freelancers: NPS is a government-backed retirement plan. It is secure and offers tax benefits.
- Mutual funds: Invest in long-term equity mutual funds to increase your retirement corpus.
Do both if you can. Begin early, and invest systematically, even if it is a small amount.
Budgeting for Investment
Before you can invest well, you need to manage your money well. This is known as investment budgeting for freelancers. Here are some easy steps:
- Keep track of your expenses and income
- Save at least 20% of your earnings
Save for taxes
- Split your money into needs, savings, and spending
- There are apps to assist with budgeting also.
- Mutual Fund Apps for Freelancers
Conclusion
Freelancers and gig economy workers tend to experience financial fluctuations. But with intelligent planning, you can invest, save, and grow your money effortlessly. Start with mutual funds. You don’t have to spend much, and you don’t have to be a genius.
Begin small. Be regular. Select the correct funds. And utilize the tools and apps of today. Your money will grow with time, and you will feel more secure and liberated.
Please share your thoughts on this post by leaving a reply in the comments section. Contact us via phone, WhatsApp, or email to learn more about mutual funds, or visit our website. Alternatively, you can download the Prodigy Pro app to start investing today!
What is the best mutual fund for tax saving?
ELSS (Equity Linked Savings Scheme) is excellent. It saves tax for you and accumulates wealth.
How can a freelancer create an emergency fund?
Utilize short-term or debt mutual funds. Attempt to save 3 to 6 months’ worth of expenses.
Is NPS beneficial for freelancers?
Yes. It allows you to save retirement and provides tax relief.
Are SIPs superior to recurring deposits?
For long-term investment, SIPs in mutual funds typically yield a higher return compared to recurring deposits.
Disclaimer—This article is for educational purposes only and does not intend to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.
Assistant Vice President – Research & Analysis
Akash Gupta heads the Research & Analysis department at BFC CAPITAL, where he combines in-depth market insights with strategic analysis. He holds multiple certifications, including:
- NISM-Series-XIII: Common Derivatives Certification
- NISM-Series-VIII: Equity Derivatives Certification
- NISM-Series-XXI-A: Portfolio Management Services Certification
- IRDAI Certification
With his expertise in equity, derivatives, and portfolio management, Akash plays a key role in providing research-backed strategies and actionable insights to help clients navigate the investment landscape.
