Why to invest in Equity Mutual Funds?
Equity mutual funds are those funds which mainly invest in stocks and have higher returns & risk involved when compared to other mutual fund categories. They can be sub categorized as diversified equity, large cap, sector funds, ELSS, small & mid cap, etc.
- More diversified fund has less negative effect of individual stock on NAV.
- Equity mutual funds might have notional losses in short-medium term but, in long term they will be profitable.
- They charge exit load maximum of 2.5% of NAV if redeemed/switched-out within a year of allotment.
- As the NAV keeps fluctuating, SIP would be better investment option when compared to one-time investment in case of Equity mutual funds.
- A nominee can be appointed by the investor for mutual fund units.
- The tax implication on long term capital gains of equity funds is nil, in case of short term gains they would be taxed @ 15% STCG.
- Equity mutual funds such as ELSS are eligible for tax benefit under sec 80C of Indian Income tax up to Rs.1,50,000.
- The entry load for mutual funds is nil.
- Equity mutual funds also have the dividend option which is tax free.
- Mutual fund units are not subject to Gift Tax.
Equity mutual funds are for those who are looking for long term investment which is more than 5 years as the returns would be high.
You can compare and buy mutual fund units online at www.instaemi.com
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