What is Equity mutual funds? How to invest in it. A beginners guide on it in 2020

What is Equity Mutual funds. How to invest in equity fund. Type of equity Mutual funds. How does they works. How to choose good equity Mutual fund.
A beginner Guide about Equity Mutual funds.

Audio version of this post.

In the present time, you should consult any person where you invest your money, so perhaps the answer for most people is real state, stock market or mutual funds. Nobody would advise fd here. And those who want to invest with less money will advise mutual funds.

And in today's post, we are going to talk about equity mutual funds, the most popular type of mutual funds. In which we will tell you what is an equity mutual fund and how can you invest in it.

And yes, in some earlier posts, I have given information about Mutual Funds and sip Mutual Funds. If you have not yet read those posts, then read them, whose links are given below.

let's take a look on table of content given below and feel free to jump your on favorite part of the post.


what is Equity Fund.

Any investment we make in equity funds is invested in the stock market by fund managers. 

So basically people who want to invest in the stock market but they have a low budget and they do not have much knowledge of the stock market, they can invest indirectly in the stock market with a low budget with the help of equity fund.

If you invest in the direct stock market without the help of a mutual fund. Then you have to find good shares first, and in such a situation, if you do not have good knowledge of the stock market then you will have to take help of any stock market expert to find out  good shares.

Apart from this, you also have to take care that when you have to sell your stock and when to buy the stock, it will take both your money and time. If you do not want to get into all this mess then you should invest in equity fund.


How does Equity fund works.

In equity funds, money is taken from all investors by a mutual fund company. And which he gives to the fund manager. That fund manager is a stock market expert who has good knowledge of the stock market.

That fund manager invests that fund in buying good shares. And the mutual fund company distributes units equal to that share to all investors. And if the investor wants, he can sell the units of his share.

And this is how equity mutual funds work. Experts have said that one should never invest in equity funds for short time. Invest in equity funds for a long time.


Types of Equity fund.

There are many types of equity mutual funds, but I will tell you only about the types in which I have invested myself and in which most people like to invest.


Large cap Equity fund.

In this type of equity fund, 80% of the investor's money is invested in the shares of the top 100 companies. Here only those investors who do not want to take risk should invest.

Because the stocks of the top 100 companies are always stable, they do not matter if the stock market is down or the stock market is crashing. That is why the returns they get from them are averaged.


Mid cap Equity fund.

In this type of fund, the fund manager invests about 65% of the investment of the investors in the shares of companies ranked from top 101 to 250. And the rest of the money is invested in fd and bonds.

Since such companies were in the growing stage, the risk is very high. And it also has more returns than large cap funds.


Small cap Equity fund.

Investors' money in small cap funds is 65% invested in companies ranked above 250 according to market capitalization by the fund manager.

And the rest is invested elsewhere at 35%, in which companies are in their initial stage, hence it is more risky than both larg cap and midcap and it also has more returns than large cap and midcap. 

conclusion -

I hope you have liked the information related to equity mutual funds, if you liked the information given in this post today, then do share it. And comment how you liked this post. And stay with us for similar information.

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