Equity mutual fund is suitable for investors who are seeking long term capital growth. As they are either actively or passively managed by the fund managers, the risk and return vary from scheme to scheme under equity mutual funds.
Broadly speaking, your investment choice should be guided by two things: risk appetite and investment horizon. Always remember, your short to medium-term goals should be funded by using relatively-safer debt investments. This is because you cannot afford to lose money when you don't have much time in hand. Equity Funds are a better investment for long term goals or for idle money which is not required by the investor. Investors should start looking at Equity Funds option if their investment horizon is 5 years or more.
Although Mutual funds are most preferred means to generate wealth but also are prone to investment risks. Thus seeking the help of a mutual fund advisor is always recommended, whether someone’s a novice or a pro in this investment domain. A mutual fund advisor makes sure that his clients receive the best scheme with good returns as per his/her risk appetite.
You need to comprehend some of the fundamental elements of investing that would aid you in taking a proper investment decision. The first and foremost step that goes into putting money in mutual funds is having a definite purpose of doing so. It can be retirement planning, wedding planning, purchasing a new home or a car, child education planning or long term wealth creation.
Diverse sorts of mutual funds are accessible in India as per the extent of risk you are willing to take. This is then followed by the method of investment and to opt for long-term financial goals and objectives a proper scheme is recommended, and you can then zero on the equity mutual fund scheme.
According to the preferences of their clients, the mutual fund consultants furnish them with the strategies of investment (SIP, Lumpsum, and STP), schemes (Equity/ Hybrid) and options (Reinvestment, Dividend Payout, or Growth). If the purpose is to meet a goal that entails an enormous capital, an individual should opt for growth alternative. On the other hand, the dividend option would be the befitting choice if someone wishes to receive profits every now and then.