Equity fund investment are the investment which are made in made in stocks or equity. Skeptical about equity funds? It is actually the most beneficial and opportune way for a retail investor to get an exposure to stocks. If you are unsure as to how mutual funds are advantageous.
1) A convenient way to participate in the India growth
Story Benjamin Graham, also known as the father of value investing, had remarked that making money depends on the “amount of intelligent effort the investor is willing and able to bring to bear on his task”. He was referring to stock analysis. According to him, an intelligent investor is an individual who has the time, energy and capability to conduct his or her own investment research. Not many would fall into this category of intelligent investors. Even if one does possess the skills, capability and knowledge to manage their own investments, the issue of time is a valid one
2) Fire proofs savings against inflation
According to data released by the Statistics Ministry in New Delhi, the Consumer Price Index, or CPI, rose 7.31% in June and 8.28% in May. No one has to spell it out that inflation corrodes your savings. For instance, an investment in fixed deposits assures you of a definitive return, currently the 1-year return on a bank fixed deposit is between 8-9%. Take tax and inflation into account, and your investment would have defeated its purpose. Equity is one asset class that manages to outperform inflation over time. And, believe it or not, it does have a tax break. The tax on long-term capital gains is zero, which means you pay no tax on the return you earn from your investments if you hold it for at least a year.
3) High potential of returns
Despite the risk of loss, Equity Linked Savings Scheme also has high return potentials. In a long term, the investment in shares might give high returns. In the last 20-25 years, Equity Linked Savings Scheme has given high returns to investors.
4) Investment with SIP is possible
SIP is the most suitable for Equity Linked Savings Scheme as it assures the required investment amount for tax saving. SIP does not always give the desired results but reduces the risk factor. Equity funds have widespread diversification, with very small initial investment. This means buying stocks of different companies at different times in different economic sectors. This is helpful in ways that if a stock drops at the exchange the other stocks can make up for the loss.
To redeem your investments, you will have to fill up a redemption form. If you submit it before 3pm, the NAV of that working day is applicable. Post that time, the units will be redeemed at the NAV of the next working day. Once the redemption request is successfully received and verified, it takes anywhere from 2 to 4 working days for the proceeds to be credited to the registered bank account
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