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3 Reasons Equity Mutual Funds Are Good For You

IndianMoney.com Research Team | Updated On Tuesday, May 16,2017, 06:55 PM

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3 Reasons Equity Mutual Funds Are Good For You

 

 

 

Do you want a good return on investment? A stupid question to ask. Yes, you and all citizens of India want a good return on investment. An investment which can give very good returns? It's got to be Equity Mutual Funds. Yes, equity mutual funds invest most of your money in stocks and can give very high returns.

But...you must exercise caution. Just as stock markets rise, they can also fall down. Equity mutual funds invest most of your money in stocks. They come with a disclaimer, Investments in mutual funds are subject to market risks. Please read the offer document carefully before investing.

Are you the kind who likes to take risks in investments for a higher return? If your answer is yes, equity mutual funds are just right for you. Want to know more on equity mutual funds? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.

 

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3 Reasons Equity Mutual Funds Are Good For You

  

1. Diversification protects your money

 

You must have heard the saying, Do not put all your eggs in one basket. What would happen if the basket falls? Equity mutual funds follow very much the same approach. Equity mutual funds invest your money in stocks across sectors called diversification. Your money would be invested in stocks of Pharma, IT, Banking, Automobiles, Real Estate or even Financial Services.

The fund manager of your mutual fund is able to manage risk in investment only because of diversification. Don't you think your investment in equity mutual funds is protected?

 

2.  Your financial goals are achieved

 

A financial goal is expressed in terms of money and time. You might have short term, medium term or even long term financial goals.

Short term goals: Invest INR 1 Lakh to go on a foreign trip within a year.

Medium term goals: Invest INR 2 Lakhs to buy a car within 3 years.

Long term goals: Invest INR 10 Lakhs for retirement which is 15 years from now.

Saving and Investing for your child's education and marriage? Saving and Investing to buy a car? Saving and Investing for Retirement? These could be your financial goals.

Equity mutual funds are long term investments. Invest in equity mutual funds, only if you are willing to stay invested for at least 3-5 years. Link your equity mutual fund investments to financial goals.

 

3. Equity mutual funds help you save tax

 

A very popular way to save tax? Invest in equity linked saving schemes known as ELSS, which is an equity diversified mutual fund and enjoys tax benefits. ELSS invests most of your money in stocks. An investment in equity is subject to market conditions, which makes it very volatile in the short term. Invest in ELSS, only if you are capable and willing to bear risk. ELSS has a lock in of 3 years. You cannot withdraw your money from the ELSS for 3 years. You are forced to stay invested, which is actually a good thing.

ELSS enjoys EEE benefits. You get a tax deduction up to INR 1.5 Lakhs a year, under Section 80C of the income tax act. Your money may grow during the tenure of the investment and this is not taxed. The money you withdraw at maturity after 3 years is not taxed.

Yes, investing in equity mutual funds can be very dangerous, if you don't know what you are doing. You have to do your research and homework. A long term investment in equity mutual funds is quite safe. So stay invested in good equity mutual funds for the long term. Be Wise, Get Rich.

 

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