We always look for some or the other type of investment to grow our wealth. Today, many people are turning towards mutual funds for investment. Surely, mutual funds are a great option for investment. There are different types of mutual funds and it is said that the equity fund is the best amongst them for an individual.
Equity mutual funds are a type of mutual fund, however, with a portfolio manager that invests the shareholders’ cash termed as equities, in the ownership of a business. You can avail great benefits by investing in equity MFs.
Often, these types of funds are known for the high risk – high profit fundamental and to achieve larger goals; you must decide investing in them.
Equity MF has certain significant advantages over the other funds and hence, is considered as the only secret of wealth creation. Apart from having numerous benefits, including income from dividends, liquidity, and the potential for capital appreciation, equity funds portfolio also gives the advantage of diversification.
- Capital appreciation-
These funds offer capital appreciation when there is an increase in the fund’s NAV and re-invest the profits, resulting in the long-term growth.
- Dividend-
It gives the investors a steady flow of regular income in the form of dividends when the funds earn a profit. Each company has its cycle and with the right selection and a diversified portfolio, the investors are guaranteed with a pay cheque every month.
- Liquidity-
When you invest in stocks, they do not provide much liquidity in case of an emergency. However, investment done in equity MF units does. You can buy and sell open-ended funds anytime.
- Diversified portfolio-
They have a widespread diversification that too with a small investment and it leads to the wealth creation over a period.
- Tax rebate-
The returns on the equity funds investment held for a minimum of a year are exempted from taxes. Apart from this, even the dividends are tax-free.
- Free from commission or brokerage –
An investor can completely avoid the commission or the brokerage fee in this case, unlike other funds where the fund houses levy brokerage, bank fees or commission for the services they provide, reducing the profit of the investor.
- Reduced Risk –
Being managed by expert professionals, these funds carry less risk and high probability of wealth creation. On the second thought, they demand less time commitment from the investor’s side and time is money!
Equity Mutual funds are characterized to provide continuous profit over a longer duration and are thus, true wealth creators!
Keywords –
equity mutual funds, equity fund