Should you invest in mutual funds to achieve financial independence? Experts speak
Financial Independence and Retire Early or FIRE is one of the oft-mentioned financial goals for GenZ, incentivising them to set aside a portion of their earnings and invest in long-term assets such as equity and gold for stable and consistent returns.
But what about investing in mutual funds? Can you use mutual funds as part of your strategy to achieve financial independence?
Afterall, you can get exposure to all asset classes via mutual funds. From debt to equity, and gold to benchmark indices – you could buy the 'right' fund and curate a well-rounded portfolio by investing in mutual funds across schemes and fund houses.
To make the most of rupee cost averaging, you could invest via systematic investment plan (SIP). Not to mention that this is one of the most popular routes of investing among retail investors.
In June 2025, the total amount of SIP contribution touched ₹ 27,269 crore across all mutual fund schemes in India, which was 28 percent higher than the corresponding data of June 2024. (See table below)
We asked a few experts to find out more about the possibility of using mutual funds for achieving financial independence and retire early (FIRE).
When you start early, one of the key factors that work in your favour is the magic of compounding. A small but consistent investment -- when done over a long period -- tends to give disproportionately high returns.
Investors can first create a well-rounded portfolio including different asset classes such as gold, debt and stocks to achieve their financial goal of becoming financially independent in 15 years.
'A portfolio that is well-diversified helps distribute risk among different asset classes, such as gold, debt, and stocks. Alignment with evolving objectives and market conditions is ensured by periodically assessing and rebalancing your assets each year. As income grows, one should also increase investment amounts periodically to stay on track. Staying informed about economic trends and tax implications can further enhance returns,' says Swapnil Aggarwal, Director of VSRK Capital.
'Among the most effective strategies for long-term wealth building is investing through Systematic Investment Plans (SIPs) in mutual funds. SIPs not only instil financial discipline but also help average out market volatility. With patience, discipline, and the right strategy, building a sizeable corpus for early retirement or financial freedom becomes an achievable goal,' he adds.
'Asset allocation plays a vital role in the journey of wealth creation. Based on how much you save, your risk appetite, and your understanding of financial instruments, the right mix of asset classes can help you navigate market volatility with greater confidence,' says Sachin Jain, Managing Partner, Scripbox
Another factor that matters a lot is financial discipline i.e. keeping expenses under control and saving consistently. The habit of disciplined saving is crucial for wealth accumulation, and it is the first step towards achieving early retirement.
'Wealth creation primarily stems from your core activity, be it a business, profession, or salaried job. Financial planning begins with this income. You use it to meet your expenses, and what remains becomes your savings. Therefore, a fundamental principle is to control your expenses and aim to save consistently. This habit of disciplined saving is crucial for wealth accumulation and is the first step toward achieving early retirement,' says Sachin Jain, Managing Partner, Scripbox. June SIP contribution ( ₹ crore) Annual increase 2025 27,269 28% 2024 21,262 44% 2023 14,734 20%*
(Source: AMFI)
*Over ₹ 12,276 crore in 2022
Well, it is important to realise that what looks perfect on paper may not be as easy in real life. Sometimes, you could lose your job, the expected promotion does not come through, your employer fails to give an annual bonus during a year or two. This completely botches up your investment plan and gives a setback to your financial discipline.
'Often, decision-making is tested during uncertain times. That's when poor choices are made, usually driven by fear or lack of clarity. Such missteps often stem from a lack of knowledge or confidence. That's why disciplined investing, prudent asset allocation, and securing yourself against contingencies during the accumulation phase are key pillars to plan for early retirement effectively,' adds Jain of Scripbox.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.
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