Wondering about earning good equity mutual funds returns? You should first be interested in learning about why you should invest in the same, in the first place. Why should you invest? The basic investor base for these funds comprises of people who are capable of taking higher risks for earning a prospective reward which is quite handsome to say the least. Those who are not seeking rapid appreciation of capital or those who are simply shying away from taking higher risks, are not the ones eyeing equity mutual funds returns or investing in the same.
This class of investors usually opts for debt based mutual funds which are considered to be less risky although they have generated comparatively lower returns over the years. People seeking higher value of their surplus funds may consider this channel for investment although some research and homework may be needed beforehand. These funds are managed majorly by experts in the market and professional managers of funds. The investments may be given to the mutual fund agency.
You can invest by paying the whole amount right up front. This is the lump sum investment method. Additionally, you can consider investing smaller amounts periodically which is the SIP (systematic investment plan) method. You should invest if you have requisite appetite for risk. Equity mutual funds returns have been higher than inflation levels as observed by experts over several years. Most investments which are safer, offer lower returns just equal to or even less than inflation rates. An investment here diversifies the overall portfolio of the investor. There will be investments in several stocks/shares of multiple companies which spreads the risk.
Equity mutual funds can enable appreciation in capital over a sustained time period. The ELSS schemes comes with tax benefits up to Rs. 1,50,000 under Section 80C of the Income Tax Act which is a major boon to say the least. The fund will be professionally managed and this is another measure of overall security, tracking and analysis.
When it comes to these funds, the liquidity levels are far higher in comparison to several other investment plans or schemes for mutual fund investments. Shares and company stocks are readily traded throughout major global exchanges regularly. They may not offer immediate liquidity such as fund withdrawals from bank accounts, you still get more liquidity than you may have originally bargained for.
In a nutshell, if you have done your homework on companies to invest in and can also carry the slightly higher risk, equity mutual funds can be promising investments if you do it right. In fact, you can look forward to earning higher returns with the right investment strategy over a prolonged time period. However, do your market research carefully prior to investing since there are risks involved.