Equity Mutual Funds are like a forward in a football game. Just like those offenders, equity MF not only gives a kick but also, balances your portfolio.
An equity mutual fund is a mutual fund that invests in stocks. They are a lucrative and interesting investment avenue present in the market today. Over the period of time, we have seen people moving from low-return instruments like NSC, Provident Fund and fixed deposits. Equity mutual funds not only help you get capital appreciation but also help save tax. There are options available under equity mutual funds which are specially designed to give you tax benefits. These funds may even provide you inflation-beaten returns in the future.
Here are the reasons why you should be investing in an equity mutual fund today:
1. They are aligned with your financial goal
Most of the funds are open-ended, which makes it easy to link the investments with any of your 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.
2. Diversification in stock investment
The amount invested through equity mutual funds are spread in substantial sectors and have holdings in various companies which allow mutual fund managers to spread the risk and reduce the future losses due to market volatility. Since the amount is invested through an expertise and a demonstrated performance, it is much safer compared to buying stocks directly.
3. Tax-saving element
Investors can avail tax benefits by investing in ELSS (Equity linked saving scheme) funds. These equity-linked tax saving investment schemes provide investors with total tax saving benefits of Rs 1.5 lakh under section 80C of the Income Tax Act, 1961.
4. They are Tax-free
Equity mutual funds, which are invested for more than one year of time horizon, are tax-free. Even dividend received till Rs 10 lakh from mutual funds is tax-free in the hands of investors.