1. Returns from shares – Equities have historically been the best asset class in terms of long term returns. However, the layman faces a lot of obstacles when it comes to tapping the true potential of equity markets. Here is where an equity mutual fund comes in.
2. Low investment amounts – Investments in equity mutual funds can be done with as low as Rs 500 per month.
3. Low expense – The expenses related to equity funds are one of the lowest.
4. Professional expertise – The fund will be managed by an able professional and the investor stands to benefit out of it.
5. Sebi's close watch – Securities and Exchange Board of India, or Sebi, one of the best market regulators in the world, governs not only stock markets but also mutual funds. This ensures safety of your investments.
6. Instalment options – While one can invest lump sum amounts in mutual funds, an option to do so in instalments is also available. Systematic Investment Plans, popularly known as SIPs, are a favoured route of investment where in the investor puts in a fixed amount of money every month into the fund.
7. Tax benefits – ELSS or equity linked savings schemes stand to gain the maximum benefits under section 80c of the income tax act. Tax benefits for up to Rs 1.5 lakh of investments are allowed under section 80c. A shorter lock in period and the benefits that accrue at all the three stages make them a favoured asset class.
8. Wide range of choice – Since a wide range of mutual fund schemes are available, each person can opt for the one that is most suitable to him or her.
9. Liquidity – Equity mutual funds are one of the most liquid asset classes. This means that one can immediately monetise his holdings as and when required and doesn't have to wait until the tenure is over like in the case of fixed deposits, provident funds or insurance policies.
10. Ease of transaction – One can invest in equity mutual funds through broking institutions, banks and financial advisors from any part of the country. Moreover, investments can also be made via online.
(In arrangements with Sampadhyam)