You might be able to earn inflation-beating returns if you invest in stock and mutual funds. Investments should be made only when you are prepared to take a certain amount of risk. Taking a higher risk will yield higher returns.
The risk associated with stocks is far higher than that of equity mutual funds. You reduce the volatility of your investment by spreading your investment across multiple industries and sectors when you invest in diversified equity mutual funds. Before investing your money, you need to perform extensive research on the right stocks.
Research is done by experts in equity mutual funds, and a professional fund manager manages your investment.
The mutual fund company charges annual management fees for this service.
It is best to start investing in equity through a mutual fund if you are a new investor with little or no experience in the stock markets. In addition to a fund manager managing your investment, the risk is comparatively lower. Depending on your risk appetite, you can choose different types of equity funds to meet your financial objectives.
As an example of passive investment, ETFs or index funds may be suitable. Market indexes are tracked and replicated, giving you returns that match these indexes. Furthermore, it has a lower expense ratio than actively managed funds.
The benefit of investing in mutual funds is that the fund manager has extensive expertise and experience in the field. No matter which stocks you pick, you won’t have to worry about monitoring and allocating them. For investments in stocks, this service is unavailable. It is your responsibility to pick and track your investments.
By diversifying a portfolio, equity diversified mutual funds can reduce risk, as has already been proven. As a result, stocks are susceptible to market fluctuations, and the success of one stock cannot compensate for the failure of another.
Furthermore, depending on your risk profile, you might consider investing in equity funds. If you want a passive investment that offers returns similar to a market index, then you can invest in index funds. Sector funds, which invest in only one sector, are more risky than these funds.
The equity funds that you invest in will depend on your risk and return expectations, such as index funds, flexi-cap funds, sector funds, ELSS funds or large-cap funds.
Investing in stocks does not give you any tax benefits. The tax deduction for tax-saving mutual funds called equity linked savings schemes or ELSS is limited to Rs 1.5 lakh per tax year under Section 80C. Tax-savings and inflation-beating returns are two of the advantages of ELSS investing.
A mutual fund that invests in 50 different stocks may be an equity diversified fund. In addition to protecting your investment from the volatility of the stock market, it also lowers the costs of investing. A stock portfolio might need to be diversified across 50 stocks, for example, which could cost quite a bit of money. Investing in equity diversified mutual funds is an easy way to achieve this at a much lower cost.
Furthermore, the rupee cost averaging benefit for monthly SIP investments in equity mutual funds can be enjoyed with just Rs 500 invested every month.
Small investors would find it difficult to maintain a diversified portfolio of at least 25 to 30 stocks. Equities diversified mutual funds also provide investors with a diversified portfolio managed by a third party. You can invest in multiple stocks by purchasing units of the fund. Furthermore, you can invest in equity mutual funds through systematic investment plans or SIPs, where you deposit small amounts regularly.
Mutual funds choose the stocks to be included in their portfolios based on the fund manager’s recommendations. Stocks are picked and held for a particular period of time without your control. Investing in equity mutual funds does not give you the option of exiting certain investments in your portfolio. The individual investor, however, has more control over his investment as he is able to buy and sell with greater ease than the investor who invests in mutual funds.
The downside of investing in equity funds is that you don’t need to spend hours researching individual stocks. Your investment is handled by the fund manager and the research team picks the right stocks. Before investing in the equity fund, you should check important parameters such as the fund manager’s track record, the assets under management, and the investment style he/she follows.
Long-term investing is necessary when investing in stocks and equity funds. A timing approach to exiting stocks is crucial, however. If your goal is to achieve long-term financial stability, you might opt for the buy and hold strategy with equity funds.
TAGS: MUTUALFUNDS, STOCKINVESTING, STOCKMARKET, STOCKMARKETINDIA, STOCKMARKETINVESTING, STOCKMARKETINVESTOR, STOCKTRADING
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At Ruchir Gupta Training Academy, we can train a beginner into a pro trader in just one month. We use the highly proven GCD (Date, Direction and Target) method, which significantly enhances accuracy in identifying market trends and targets. With our comprehensive training approach, you'll gain the skills and knowledge needed to earn from the stock market successfully.
What sets us apart is our commitment to providing personalized attention and guidance to each student via the support team. We prioritize individual learning needs and tailor our approach accordingly. We provide online trading courses so you can learn at your own pace. Additionally, Sir Ruchir Gupta brings his own extensive experience to the table, ensuring that you receive top-notch mentorship.
Yes, absolutely. We believe in providing support and guidance to each student. Our support team is always there ensuring that you receive the assistance you need to succeed. Whether you're a beginner or an experienced trader, we're here to help you reach your goals.
Students enrolled in our share trading course have access to a wide range of recorded video lessons and scanners designed to enhance their learning experience. Apart from these students are also provided with a mighty community and telegram group where they can interact with their fellow learners of the course and enhance their knowledge.
Yes, we have numerous success stories and testimonials from previous students who have greatly benefited from our courses. Many of our graduates have gone on to become successful traders and investors, thanks to the knowledge and skills they acquired at Ruchir Gupta Training Academy. You can read some of their inspiring stories on our website.
