Guide for equity fund investment beginners

What is an equity fund?

An equity fund is a mutual fund that invests in the stocks or shares of organizations and generates high returns. In this type of investment, there are maximum chances of higher returns than debt and hybrid funds. At the same time, it consists of greater risks too. Since it is invested in the shares of an organization, the performance of the institution plays an important part in generating returns. The investment can be made through SIP and the minimum amount could be as low as Rs. 500. There is a vast range of mutual fund schemes available in the market and the investor can choose from a wide variety of options depending upon the risk factor as well as return factor.

Why should one invest in mutual funds?

It could be a little tricky for beginners to invest in mutual funds. Here are a few reasons why mutual funds are worth your time and money-

• Low-level investment- Mutual funds do not require you to invest a hefty amount in the beginning. You can invest as low as Rs. 500 depending upon the circumstances. One added advantage in mutual funds is anyone can invest through a Systematic Investment Plan or SIP which is mostly not possible for other investment options or the lump sum amount.

• Convenience- The procedure of investing in mutual funds is very straightforward. One can go paperless and invest online on mutual funds by visiting the official website of the mutual fund house. The investor can make any investment according to the market situations or depending upon their individual requirements.

• Professional assistance- The option brings a process manager with itself. Your funds will be managed by a professional team that is an expert in the field. Your investment manager will do the required research and will help you strategize the investment procedure for asset allocation. The manager will also help you choose a suitable security option according to the investment objectives.

• Tax saving- Under section 80 C of the IT Act, the investor can get a tax deduction of up to Rs. 1.5 lakhs a year in case of some specific financial instruments. Equity Linked Savings Scheme or ELSS is one of the most popular tax-saving equity funds in India that helps the investor in tax saving as it generates higher returns in the time period of three years.

How can you invest in mutual funds?

Following steps can be followed to invest in a mutual fund-

Step 1- Go to the official website of the mutual fund house.

Step 2- Fill in the required details and complete the e-KYC

Step 3- Select the particular scheme from the list of options.

Step 4- Click on invest now.

Step 5- Select the amount of investment and the mode from the available options.

Step 6- Complete the transaction.

Conclusion

Mutual funds are a great way to keep your money and get profit out of it after a certain period of time. A beginner must set a goal and budget before investing in the equity funds so that he has a clear idea of what he will get, considering the market situations. It is best to invest in more than one mutual fund and earn risk-adjusted returns or profits.