We always get fascinated by the news of company gaining huge profit in it's quarter or annual report. That makes us curious and urge the feeling of investing in it. But many drop the idea of investing in it due to two major reasons. First, they lack proper knowledge about investment and don't have time to track the performance or up-down movement of the company. Second, the amount you wish to invest is comparatively smaller. In such scenario, equity mutual fund comes in picture.
Equity mutual fund gives you the advantage of investing in not just one company but many companies that is too with very little capital (through SIP). Apart from the fact that it is managed by professionals and research team works on where to invest your money. Equity funds has it's own perks. Let's see those in detail.
Capital appreciation: One of the primary benefits of investing in equity mutual fund is to get capital appreciation benefit. It is one of the financial instrument which can give you high inflation beating returns. If there is an increase in stock prices, it would reflect in appreciation in the invested money. On can accumulate good amount of wealth over a period of time.
Diversified portfolio: 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.
Liquidity: Getting the corpus back to your bank account is easy while investing through mutual funds. Redemption can be done at any point in time. Whenever you are in need of money, you can stop your SIP and redeem the number of free or all units you want. The whole process takes around about a week’s time but if your SIP is already matured, you can get your money back in three days.
If you are an investor with a moderate risk appetite, but also wants widespread diversification in your equity portfolio, investing in equity mutual funds would be the wisest investment decision you can ever make.