Amongst the various investment vehicles, options available under equity mutual fund come up with the least lock-in period for saving taxes. If you have still not done any investment for saving tax during this financial year, ELSS is one of the best options for you to avail tax under section 80C of ITA 1961.

If you want capital appreciation and tax saving both, go for the options available under equity mutual funds. Equity mutual funds help in beating up the inflation by providing good returns in future. Although they are risky by nature but the risk reduces in long-term investments. Before you invest in equity mutual funds, understand the universal purpose behind it.

They are goal-oriented funds
In the financial market, there are a wide variety of funds available & these funds provide investors with a very useful and convenient investing vehicle. As most of the funds are open-ended, that easily helps investors achieve their goals as the funds comfortably fit in the duration of any goal which they wish to get it fulfilled.

Long term investment in equity mutual fund is suitable for all kind of goals like child marriage, child education, vacation, retirement planning, wealth creation etc.

They are tax-saving funds
Through equity MFs, mutual fund investors can easily avail tax benefits by investing in ELSS (Equity linked saving scheme) funds. It is a special type of equity fund investment which provides the investor tax deduction benefits under section 80C of the Income Tax Act 1961, up to a limit of Rs.1.5 per year. By declaring the amount in your investment declaration sheet you can avail the tax benefit.
Dividends from mutual funds are also tax-free in the hands of investors (This, however, depends upon changes implemented in Finance Act 2016). Equity mutual fund gives you broader aspects to think of not only doing investments for your future financial goals but also do your tax savings and appreciate your wealth as well.

They are diversified funds
The amount invested through equity mutual funds are spread in substantial sectors which reduce the risk of having losses in future. A single fund is so much diversified that it in itself restrains the market risk.

For example, ICICI value discovery fund is in itself diversified in banking and financial services sector, information technology, pharmaceuticals sector, automotive sector, engineering, and capital good sector and so on. The overall accumulated investments done by small-small investors in ICICI value discovery fund are well-diversified among these sectors which in turn diminishes risks. The more the diversification, the more you adjust the risk towards the accountability of unsystematic risk on your goals.

However, even a portfolio of well-diversified assets cannot escape all risks. It’s a fact that one should never put all eggs in one basket.

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They are multiplier funds
Compounding takes place when you reinvest your earnings. With time horizon, the phenomenon of compounding transforms your working money into a state-of-the-art, highly powerful income-generating tool. The more time you give to your investments, the more you will be able to enhance the potential of your base investment, which will grow with time & can also try to beat inflation in future.

Example: Suppose you invested Rs.10000 at 15% in a SIP (Rs.833 per month) scheme. You will have Rs.11000 after one year. Now let’s say that rather than withdrawing Rs.1000 gained from interest, you keep it there for another year. Assuming, if you continue to earn the same rate of 15%, your investment will grow to Rs.23500 approximately by the end of the second year & by the end of 10th year, you will get Rs.2,32,000 & 20th year it will amount to Rs.12,60,000 approximately.

They are juicy funds
It is very easy to liquidate yourself from equity-oriented funds. Buying of funds can also be done very easily. Equity mutual funds offer easy to invest facility through the ECS mode & withdrawals of free units in case of open-ended mutual funds can also be done very smoothly through redemption. At any time you can stop your SIP without too many formalities. Moreover, there are various liquid funds for those investors who are hidebound, but want to grow their money at a good rate of return & crave to pool out their money every now & then. This way, equity becomes a part towards all the segments of clients.
The choice of the equity mutual fund scheme depends on your investment horizon – the total length of time for which you are expecting to hold a security or portfolio. It defines the risk involved in relation to income you need at that point in time.