SWATANTRA KUMAR EXPLAINS MULTI-CAP FUNDS - WHY SETTLE FOR ONE WHEN YOU CAN HAVE MANY
American investor Peter Lynch once said that Equity Mutual Funds are perfect for those who want to benefit from Stocks but don’t want to or can’t research. However, that is not the only benefit of Equity Fund investment. Let’s look at why you must have these Funds in your portfolio
AN EXPERT MANAGES YOUR MONEY
Equity Funds spare you not only the research but also the time needed to monitor stocks. There are expert Fund Managers who use their expertise to allocate your money optimally.
YOU CAN INVEST WITH EVEN Rs.500
Equity Funds allow you to invest with as low as Rs.500, thanks to Systematic Investment Plans (SIPs). Thus, you can leverage the potential of this asset class even with a small investment.
IT HELPS YOU BEAT INFLATION
With Equity, one of the benefits of long term investing is that there are chances of earning high returns that beat inflation.
YOU CAN LIVE YOUR DREAMS
Be it the beautiful penthouse you have been eyeing or the fun-filled international tours that you have been dreaming about, long-term investing in Equity Funds could make it all possible. That is due to the potential for returns significantly better than the inflation rate in the economy.
YOU CAN SAVE UP TO Rs.46,800 IN TAXES EVERY YEAR
Equity Linked Savings Scheme (ELSS) is an Equity Mutual Fund that allows you to save Tax on investments up to Rs.1.5 lakh annually. If you fall under the highest Tax slab, you can save up to Rs.46,800 in Taxes.
YOU CAN HAVE A DIVERSIFIED EQUITY FUND PORTFOLIO
Although Equity is one asset class, you can have a well diversified portfolio by investing across multiple Stocks of varying market capitalisation.
EQUITY AND VOLATILITY
Volatility is the new normal in financial markets. The key to success lies in staying calm and making long- term investment plans. Thinking long-term can benefit you in two ways:
1. RUPEE COST AVERAGING
Long-term SIPs help in cost-averaging. If you invest in Equity Funds through small SIPs, market lows become an opportunity. The Fund Manager can buy more units at a low price. When the prices are high, they can buy fewer units. As such, your investment cost gets averaged out over a period.
2. THE POWER OF COMPOUNDING
The magical power of compounding can convert a small sum into a large fund over time. For it to work wonders, you must start investing early and also be regular with your investments. If the temporary lows stop you from investing in Equity or make you redeem them, you might lose a chance to build your wealth in the long run.