What Is an Equity Mutual Fund, Anyway?
In terms of risk and returns, equity mutual funds are widely regarded as one of the most risky and rewarding investment options of investments. You will find that most of your money is put to work buying stock in several of companies which also include stocks from different segments such as IT, Pharma, infrastructure etc.
Growth funds are another name for these investments. When compared to fixed deposits and debt funds, the rate of return generated by equity mutual funds, is significantly higher. Efficient returns are the goal of equity mutual funds. However, due to the fact that the performance and return of these funds are also dependent on the state of the equity market, they come with a degree of inherent risk.
How India's equity funds have done so far?
The performance of portfolio would be based on how the market moves and how the economy is doing as a whole. Most of the time, equity funds have the best returns of all types of mutual funds if we talk about particularly in India.
Average returns from equity funds have been between 11% and 12% (Approximately). It is very important that you select your equity funds with great care if you want to get results that are consistent with your objectives. To do that, you need to pay close attention to the financial markets and study about different analysis.
There are a number of advantages for stockholders that want to get involved in the stock market by investing in equity mutual funds. As a result of the ease (easiness) with which investors can initiate a SIP, an SWP, or a STP (Systematic Transfer Plan), they can invest, resell or transmitting their components with greater ease.
A well-diversified portfolio of stocks in various economic sectors is possible through equity mutual funds. Additionally, it enables investments across the entirety of the enterprise value. In contrast to investing directly in stocks, this reduces risk because the downturn of some shares can be rewarded for with the price appreciation such equities.
Due to their market-linked returns, equities have the capability to increase higher devaluation returns than traditional (old) investment options such as fixed deposit, Government term plans for lower interest rate.
Handled by asset management companies, equity investments track investment options while attempting to minimize risk. There are a number of advantages for stockholders that want to get involved in the stock market by investing in equity mutual funds.
According to Section 80C of the Income Tax Act, taxpayers who invest in an equity-linked savings plan (also known as an equity-linked savings scheme or ELSS) are eligible for tax advantages of up to 1,50,000 rupees. There is a lock-in period of three years, which makes it one of the tax saving instruments with one of the shortest lock-in periods currently available.
With a monthly investment of as little as INR 500, anyone can begin investing in equity funds. And this is the best part about Equity mutual funds when potential investor wants to start with the limited amount.
SEBI rules say that there are 12 types of equity mutual funds. These categories were made to help make products stand out. Additionally, this assisted investors in increasing the knowledge of the things in which they are going to make investments. To better understand them, consider looking at them in other categories.
As an investor, you should always learn about the different parts of the market, your own risk tolerance, and your wealth and financial goals. When compared to traditional investment options like fixed deposits or other safe government deposit schemes with 6-7 percent annual returns, Indian mutual fund markets are becoming more popular.
(Note: We only write about things we know from the markets and other sources. When you make decisions about money, please ask experts for help. Each of our blogs is just for learning and education purpose.)
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