Equity Mutual Funds - How Do They Help in Money Growth?
What do we expect out of our investments? Obviously growth and capital appreciation! We want to live a life of pleasure and luxury. But the question that arises is, how to achieve that? Investments can be proved helpful in this regard. If you are looking for investment in the mutual fund programme and want to opt for the best plans, then you must read this blog till the end.
Whenever we think of utilising our money, we want to make the best use of it. The reason for the same is the money we earn with immense hard work is precious, and we never wish to lose it. The mutual fund investments provide the most efficient platform to create wealth for the future. But, there also we need to take a decision with due care.
Equity fund is an asset type under the mutual funds which majorly invests in the equities and equity-related instruments to provide capital appreciation and higher returns in the future. The schemes falling under it are mainly focussed at offering growth to the investors by making an efficient investment. As the accumulated funds are invested in the shares and stocks of various companies, the performance of the funds also depends on the ups and downs in the share prices.
The investments made in the best equity funds’ schemes help in achieving the set financial goals of the investors. It is best suited to those who are desirous of investing for a long-term duration and want to put their monies in stocks and shares of the companies. As per the requirements and risk-bearing capacities, the schemes are classified into:
- Large-Cap Funds: The schemes falling under this category invest the money into such companies that have a large market capitalisation. These are the companies that are well established and yielding high returns in the market. The risk profile associated with this category is relatively lower, and thus less risky.
- Mid-Cap Funds: All the schemes that fall under this class invest in the stocks of the companies that have medium market capitalisation. The risk profile is higher as compared to large-cap funds. But, they capacitate the ability to generate unexpectedly higher returns in the future.
- Small-Cap Funds: Under this, the funds are allocated into such companies which are either start-up or hold quite a low market cap. These companies are the ones which provide returns as per the market performance and the risk profile is comparatively higher in this case.
The equity mutual funds cater the needs of various investors by providing the following benefits that add worth to their investment value:
- Growth in NAV: The schemes designed under the equity funds category, provide appreciation in the NAV(Net Asset Value) with an increase in the market value of portfolio holdings. When the NAV increases, the value of investments also enhances that denotes capital growth. Also, the investor gets an option to reinvest the profits earned to generate more wealth in the future.
- Dividend Payouts: In certain cases, the equity funds also provide regular interest in the form of dividends. This helps an investor in fetching regular income, and hence financial stability.
- Tax Benefits: The investments made in the equity funds also provide tax exemptions under section 80C of Income Tax Act. Accordingly, an investor can save his/her taxes for an accounting year by putting the monies into equity mutual funds.
As one desires to fetch the maximum benefits from his/her investment, the equity funds provides the same to him/her. By availing the benefits of the schemes under equity funds, one can attain the set financial goals and reach the desired growth.
If you are looking for the best recommendation to start investing in the mutual fund programmes, then you can get associated with My SIP Online. There you can get various solutions that would be helpful in making an efficient investment strategy.
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