There has been a lot of talk in the market about the perceived “riskiness” of investing in equity. However, what many fail to mention is that as the investment horizon is extended, equity mutual funds not only become rewarding, but they can also generate ‘Alpha’, which is essential for wealth creation. When we analyze medium to long term returns from equity and equity-based products, we come to the realization that if an investor sticks to efficiently managed equities or equity-based mutual funds, they have the potential to not only surpass fixed deposit (FD) returns but also outperform them by 6-8%.
It is important to understand that when your investment is making 5-6% above the inflation level, it is categorized as ‘growth’ in your investment. On the other hand, with FD returns of 6-7% per annum, your investment barely manages to avoid depreciation. Therefore, it becomes crucial to thoroughly research and select investments that have the potential to provide returns of 12% or more.
For investors with real long-term horizons, typically 15-20 years, the benefits of compounding can truly work wonders. Compounding is often referred to as the 8th wonder of the world, and for good reason. It is the process of reinvesting the returns generated by your investments, allowing them to grow exponentially over time. By harnessing the power of compounding, investors can significantly boost their wealth and achieve their financial goals.
At urmutualfunddistributor.co.in, we understand the importance of safe and rewarding investment journeys. Our team of experienced professionals is dedicated to helping investors make informed decisions and navigate the complexities of the financial market. We offer a wide range of investment options, including equity mutual funds, that have a proven track record of delivering consistent returns over the long term.
When it comes to investing in equity, it is crucial to have a long-term perspective. Short-term market fluctuations may cause temporary volatility, but over the long run, equity has historically proven to be a wealth generator. By staying invested and riding out the ups and downs of the market, investors can benefit from the compounding effect and potentially achieve their financial goals.
It is important to note that investing in equity does come with its own set of risks. The value of investments can fluctuate, and there is always a possibility of loss. However, by diversifying your portfolio and investing in well-managed equity mutual funds, you can mitigate these risks to a certain extent.
When considering the performance of FDs versus equity in the long term, it is clear that the potential for higher returns lies with equity. However, it is essential to carefully assess your risk tolerance, investment objectives, and time horizon before making any investment decisions.
In conclusion, while there may be noise in the market about the riskiness of investing in equity, the truth is that with a long-term horizon, equity mutual funds can be a rewarding and powerful tool for wealth creation. By selecting efficiently managed equities or equity-based mutual funds and harnessing the power of compounding, investors can potentially outperform FD returns and achieve their financial goals. Contact us at urmutualfunddistributor.co.in to embark on a safe and rewarding investment journey.