Equity Mutual Funds for long term investing
Equity mutual funds investments are generally made for long-term goals that are for a duration of over 5 years. This could be for long-term goals such as your child’s education, their marriage, or your retirement. What are the benefits of investing in Equity Funds?...
Equity mutual funds have potential to provide risk-adjusted long term returns. You can choose to invest in equity funds such as diversified equity funds, ELSS (Equity Linked Savings Scheme) or large-cap funds, or even emerging themes in Equity investments such as ESG (Environment, Social and Corporate Governance) equity funds, etc.
The benefits of equity mutual funds include:
Equity fund taxation is 15% for the short term. If you invest for the long-term, you do not have to pay tax in case the equity fund investment is held over a year and the returns do not exceed Rs. 1 lakh. And secondly, any tax over a holding period of 1 year is considered as long-term capital gain and is taxable at 10% for gains exceeding Rs. 1 lakh. In the case of ELSS mutual fund, you can enjoy tax deduction under Section 80C of the Income Tax Act, 1961, and save up to Rs. 46,800 for the highest tax bracket each year, effectively reducing your tax liabilities.
To sum up, to be a long-term investor, you need to be willing to accept a certain amount of risk in pursuit of potentially higher returns over a longer period. It requires patience and perseverance, requiring you to stay invested for a long period.
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