Mutual funds - a smart investment option
Anyone will
advise you not to invest in these times because the interest rates are going
down. Term deposit rates are low, gold and real estate investments are also
dwindling. In equity investment, mutual funds are sustaining for the long term.
The volatility of mutual funds is something that investors are always worried
about. Given the Covid-19 situation, all banks are bringing interest rates to
the lowest possible value. The popular savings schemes like PPF, term deposits,
etc are earning very low returns. This leaves the investors with equity mutual
funds as the only option.
Benefits of equity mutual funds
The returns
in equity mutual funds are not unpredictable like the share market. These are
the best alternatives for FDs, bank saving schemes which are seeing the lowest
returns in this decade.
Experts
also suggest that real estate and gold are not options to invest. They can be
considered as commodities bought with a lot of money that can be used later.
This is not an optimal investment option as it also cannot be obtained as money
in times of need.
Equity
mutual funds are initiated through fund managers. One scheme will include at
least 40 stocks. So losing in one or two stocks at a time will not affect the
investor. Checking stocks every hour is also not a necessity as it is managed
properly. However, this definitely involves equity risks. On the other hand, it
is also performing well with higher returns in the long run.
Starting with investments
Investors
starting or thinking about equity funds can kick-start with SIP or STP. There
are varieties for investing like small-cap, medium-cap, and large-cap. It is
advisable, to begin with, large-cap and exploring debt funds is also a good
choice. Beginners must consider using tools online to create a sustainable
portfolio for equity mutual funds.
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