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Why should you invest in equity

Why should you invest in equity

5 reasons why you should Invest in Equity Funds in India

Investing in the equity market in India can offer the possibility for long-term capital increase, but it also carries perils as the value of investments can vary based on market conditions. It is imperative for investors to conduct their own research and pursue professional advice before investing in the equity market in India. 

Now let’s look at why you should invest in equity funds in India.

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Table of Content

  1. 5 reasons why you should Invest in Equity Funds in India
  2. Why should you invest in equity funds?
  3. 5 Reasons why should you invest in equity funds in stock market in India
  4. Conclusion on reasons to invest in equity funds in India

Why should you invest in equity funds?

Investing in equity funds in India can offer several potential benefits for investors. These benefits include potential for higher returns, diversification, portfolio management by professionals, a good amount of liquidity & various tax benefits. 

Further, let’s take a quick look at each of these benefits that explain why you should invest in equity funds in the stock market in India.

5 Reasons why should you invest in equity funds in stock market in India

As we know the benefits of investing in equity funds in India, let’s take a look upon each of these benefits & have an overview.

  1. A great potential for higher returns

Equity funds invest in shares of companies with the potential to grow and generate higher returns over the long-term, which can result in higher returns for investors.

  1. A benefit of diversifying the portfolio

Investing in equity funds allows investors to diversify their portfolio across multiple companies and sectors, reducing the risk of concentration in a few stocks.

  1. Portfolio management conducted by professionals

Equity funds are managed by professional fund managers who have the expertise and experience to select stocks and manage the portfolio effectively.

  1. A decent amount of liquidity is offered

Equity funds are traded on stock exchanges, providing investors with easy liquidity and the ability to buy and sell units on any trading day.

  1. Tax benefits on long-term capital gains

Equity funds held for more than one year qualify for long-term capital gains tax, which is currently taxed at a lower rate than short-term capital gains tax.

However, it is vital to note that investment in equity funds carries perils, and investors should prudently assess their investment goals, risk appetite, and consult with a financial advisor before investing in equity funds in India.

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Conclusion on reasons to invest in equity funds in India

To conclude, investing in equity funds in the stock market in India can offer several potential benefits, including the possibility for higher returns, diversification, portfolio management by professionals, liquidity, and tax benefits on long-term capital gains. However, investing in equity funds carries risks, and investors should carefully evaluate their investment goals, risk appetite, and seek professional advice before investing in equity funds in India. Overall, equity funds can be a valuable addition to a well-diversified investment portfolio for those who are willing to take on the associated risks.

Reasons to invest in equity funds in India FAQs

Depending on the fund, the minimum investment requirement for equities funds in India can be as little as Rs. 100 or as high as Rs. 5,000 or more.

In India, non-residents may invest in equity funds, but only under particular conditions.

Yes, the Securities and Exchange Board of India (SEBI) oversees the regulation of equity funds in India.

Depending on the investment strategy of the fund, equity fund managers in India rebalance their portfolios on a regular basis, typically once every quarter or twice a year.

Yes, investors have the choice to choose a dividend payout over reinvested returns in stock funds.

In India, tax-saving equity funds have a three-year lock-in term.

Compared to fixed deposits or real estate, equity funds in India have a better potential for profits but also a higher potential for risk.

In a bear market, equity funds in India typically underperform because falling stock prices can harm the fund's net asset value (NAV).

Expense ratios, transaction charges, and exit loads, if any, are some of the costs connected with investing in equity funds in India.

Yes, as long as the transition is performed within the same fund house, investors in India are free to switch between various equity funds without paying any taxes or penalties.