1. 6 things to know why equity mutual funds are a good option for making investment

6 things to know why equity mutual funds are a good option for making investment

Amongst the various investment avenues present in the financial market, equity mutual funds are one of the best category funds for an investor to invest their money.

By: | Published: May 15, 2017 3:28 PM
The scheme gets compounded returns which help in multiplying your money over a certain period of time.

Amongst the various investment avenues present in the financial market, equity mutual funds are one of the best category funds for an investor to invest their money.

Equity mutual funds not only help you in getting capital appreciation, but also help in getting tax savings. For that purpose you need to go for the options available under equity mutual funds which are specially designed to give you a tax benefit. These funds may even provide you inflation-beaten returns in the future.

They can be linked to financial goal

Most of the funds are open-ended, which makes it easy to link the investments with any of the financial goals, like child marriage, child education, vacation, retirement planning, wealth creation etc. Investors can achieve their financial goals, as the schemes comfortably fit in the duration of any goal which they wish to get it fulfilled. However, make sure that the financial goal you are opting for should not be less than five years.

They are diversified

The amount invested through equity mutual funds are spread in substantial sectors and have holdings in various companies which allows the fund manager to spread the risk and reduce the future losses due to market volatility. However, equity funds having a well-diversified portfolio cannot escape all risks. Therefore, you should never put all eggs in one basket.

They are tax-saving

Investors can avail tax benefits by investing in ELSS (Equity linked saving scheme) funds. These equity-linked tax saving investment schemes which provide investors a total tax saving benefits of Rs 1.5 lakh under section 80C of the Income Tax Act 1961.

These are tax-free

Equity mutual funds, which are invested for more than one year of time horizon, are tax-free. Even dividend received from mutual fund scheme is also tax-free in the hands of investors. Therefore, you get the desired appreciated capital without any tax getting deducted from any source.

They are highly return oriented

The scheme gets compounded returns which help in multiplying your money over a certain period of time. You earnings get reinvest and returns are calculated on every sum of the final earnings which includes return earnings of the previous years. The more you remain invested, the more you will be able to increase the potential of your inflation beaten investment earnings.

They are easily redeemable

It is very easy to redeem your money from open-ended equity funds. These mutual funds offer easy to invest facility through which investment can be done through the ECS mode. Whenever you want to withdraw your free units, it can be done very smoothly through redemption process. You can even stop your SIP at any point of time without getting into too many formalities. After signing the redemption form, it takes a maximum of three working days to get your money in the registered bank from where you have started your investments.

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