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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