How Investing in Equity Funds is Better Than Stock?
If wealth creation is your investment goal, then equities are the best option for you. But how to invest in the equity stocks? Is it safe to park the hard-earned money in the share market directly? Is there any safer investment plan which provides equity benefits?
These are some of the questions which come in the mind of every investor when he/she is going to invest for the first time. You too might be having the same concern if you are a new investor in the industry or if you are moving towards the equity investments in India. Here you will find the actual solution for your queries.
One of the most important and challenging tasks for every investor is to choose the best equity investment among different alternatives. Furthermore, deciding whether to invest directly in stocks or opt for an best equity mutual fund is another factor that make investors worried. If you too have the same doubt, you must go with the best diversified equity mutual fund. Don’t think that we are promoting mutual fund industry; there are proven facts which make equity MF a better choice as against stocks. Have a look at the reasons here!
Need to Manage & Track Funds is Diminished
While investing in the mutual funds, one gets the opportunity to avail the benefits of the skills of an experienced fund manager. The stock-picking, trading activities, sector allocation of the funds, booking profits as per the requirement, everything is undertaken by the fund manager. He/she actively or passively manages the schemes and make the best use of invested capital to gain highest possible returns. A professional fund manager makes sure that the portfolio holds good stocks with the potential to bring long-term returns.
Short-Term Gains are Tax-Free
Being an independent investor, if you manage your stock investments, you may go for some buying and selling which attracts short-term capital gain tax at the rate of 15%. While in the case of mutual funds, there is no tax payable for buying and selling stocks by the fund. This simply adds to the significant benefits for you as an investor in that fund. Yes, but there is a condition that equity investments must be held for at least one year to avoid the exit load chargeable. But there as well, we know already that equity investments are made for a longer tenure, so the exit load does not affect the decision.
Cost of Investment is Reduced
Equity fund, being a large investment, avail the benefit from the economies of scale. The fund houses tend to negotiate with the intermediaries for lowering the cost factors. In the case of buying and selling shares individually, one has to pay brokerage at the rate of 0.5 to 1 percent, and other charges like Demat account charges further add to the overall cost of managing stocks. In the case of mutual funds, they pay only a fraction of the brokerage charged to the individual investor, and the benefit is certainly passed to the mutual fund investor. Moreover, you don’t need to maintain any Demat account.
Diversification as a Part of Investment
Diversifying the funds leads to minimising the overall risk factors and increase profits for the investors. To avail the benefit of diversification, an individual stock investor needs to make several investments in different stocks or shares which is simply haphazard. You need to possess good knowledge, actively remain updated about the market performances and take quick decisions. A mutual fund provides the easiest approach to diversifying your money and reduces risk. Since you buy the schemes of equity mutual funds, your money is diversified into various sectors and companies to gain accumulated profits.
By paying a small amount as fees, the investors gain a huge benefit from the stock-picking ability of the professional fund managers, and does not have to track their portfolio. This further avail the benefit of tax savings. This all is attained when one opts for the equity mutual funds for investing. We are entirely convinced that equity funds offer much better advantages than an investor achieves from the stock market with direct investment. The reasons mentioned above are evident for the same.
So if you wish to make a smart equity investment in India with mutual funds, then MySIPonline is the perfect platform for you. You must avail our services to gain the best online mutual fund investments.
- LTCG Tax Is Not As Negative As it Seems; Here’s Why?42204 min read Jan 01, 1970
- Sensex Plunges Over 1000 Points; Should You Buy or Hold Your Investments for Correction?43073 min read Jan 01, 1970
- Sensex Dives Nearly 840 Points: Things to Consider and Experts’ Take44163 min read Jan 01, 1970