Equity Funds are mutual funds that invest primarily in company shares, also called stocks. By pooling money from many investors, these funds buy stocks across different industries and sectors. The aim is to create long-term wealth by benefiting from the growth of businesses and the overall economy. Equity funds carry higher risk compared to debt or hybrid funds because stock prices can fluctuate in the short term. However, over longer periods, they have the potential to generate higher returns.
Investors can choose from different types of equity funds based on their risk tolerance and goals - such as Large Cap (stable blue-chip companies), Mid and Small Cap (growth-oriented but riskier), or ELSS (tax-saving option). Equity funds are ideal for investors with a long-term horizon, generally 5 years or more, and for those looking to beat inflation. If you’re comfortable with market ups and downs and want to grow wealth steadily, equity funds can be a smart option in your investment portfolio.
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