3 reasons to invest in Equity Funds early
For the first time investors and experienced folks, equity funds are a safe way to put money. Equity mutual funds work better in the long run and the market risk, and return on investments depend on what plan you invest in. Equity is pocket-friendly which makes it popular. Many equity funds let people invest in with as low as Rs 500 per month. It’s also an easy investment through SIP in which a certain amount is deducted from your bank account every month and gets invested in the plan of your choice earning you the big returns over the years.
While this is just a small reason, here are 3 major reasons why you should invest in equity funds early:
- Start early for bigger returns
We all know – More You Save More You Earn. Though investing a larger amount for a small period and hoping for bigger profits might sound better, that strategy doesn’t work all the time. So it’s always better to start early, invest a small amount in the best equity mutual funds every month and get significant returns over the years.
If you start investing in equity at the age of 22 with Rs. 500 a month at 8%, when you turn 60, you’ll have gained Rs 1477155. However, if you start investing with the same plan when you’re 32, you’ll earn Rs. 624282 when you turn 60. So it’s essential to invest in equity as early as you can to get the sizeable returns.
- Manage finances according to your needs
Early investments in equity will buy you the time to plan well for your future, your long-term and short-term needs. Before investing you need to plan out your short-term, long-term and intermediate financial needs and choose the best equity mutual funds accordingly. Each mutual fund is different, so the risk and returns vary from funds to funds. Hence, invest in equity early to gain profits enough to balance both your short term and long-term needs.
- Tax planning option
One of the major reasons why people invest in mutual funds is to get tax benefits. Under Section 80C, investing money through ELSS can get you tax benefits. With lump sum with the 3-years’ lock-in period can bring the tax benefit of Rs 1.5 lakh. You can also go for the SIP and invest a small amount every month at the start of the financial year, and by the end of the year, you can claim tax deduction up to Rs. 1.5 lakh.
The experienced investors and market experts suggest investing early in the best equity mutual funds for two obvious reasons:
- As the mutual funds are subject to market risks, young investors can afford to take these risks as it’s easier for them to cope up with any losses in the long run.
- A regular investment of a small amount can help young investors to get sizeable returns over the years.
Apart from the reasons stated earlier, the diversified portfolio, easy liquidation, and capital appreciation are the reasons why one should invest in the best equity mutual funds.