Equity means investing in the shares of a company and becoming a shareholder. Equity mutual funds are mutual funds that invest in equity stocks on behalf of their customers. The fund managers are professionals who invest customers’ money in lump sums or SIP.
It is a fact that equity is one of the best performing assets over a long period.
An investor with enough knowledge to understand the company’s financial health with experience in the capital market and is buying shares of a good quality company can invest directly in stocks.
If an investor is not from a financial background or lacks market knowledge and wants to have experience in understanding the financials of a company can choose to invest in equity mutual funds. Experienced managers will handle the portfolios of their customers.
What are the Dos’ of both types of investing?
- Start investing at an early age.
- Invest in regular intervals (like SIP)
- Invest for a long time (minimum five years)
- Be patient
- Ignore volatility
- Disregard noise
- Stay the course
Putting money in equities means investing in businesses. So, it makes an investor a better businessman by investing money in equity mutual funds or equities.
Due to geopolitical reasons, the price of shares moves up and down. In a short time, the value of stock and mutual funds fluctuates due to the changing environment. It is difficult to analyze and predict the movement of the market in a short time. Hence, any decision taken will get impacted due to short-term volatility.
The selection of the right distributor is an essential factor when parking money in mutual fund schemes. The distributor should have a great experience, high integrity, and deep knowledge of stock markets. The more years he has spent in the financial markets, the better would be his advice.
Equity mutual funds and equities help to maximize wealth and provide returns more than inflation because good companies always pass the cost escalation of their products to customers and maintain profits and growth.