The Approach To Follow For Wealth Building through Equity Mutual Funds

Posted On Thursday, Jan 23, 2020

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The most convenient and one of the easiest ways to accumulate wealth is by investing regularly and in a disciplined manner. And for this, Systematic Investment Plans (SIPs), (a mode of investing in mutual funds), can prove to be a rewarding strategy to accomplish your financial goals.


SIP has made life easy –– it’s lighter on the wallet, and you don’t need to time the market to generate wealth while you endeavour to compound wealth. The rupee-cost averaging feature of SIP helps you mitigate the volatility of the equity market. Here are five benefits of SIPs:


      1. Enables rupee-cost averaging

      2. Light on the wallet

      3. Benefits from power of compounding

      4. Make market timing irrelevant

      5. Help in goal planning

In order to not hinder the path to wealth creation, ensure you do not stop or discontinue your SIPs in between as far as possible. The tenure of your SIPs in equity mutual funds should be longer (at least 3 to years, could be even more) and in line with the investment horizon set for your envisioned financial goals.


The lower expense ratio of Direct Plans can add significant additional returns to your portfolio in the long run. Every 0.25%-point reduction in the expense ratio works out to an additional earning of Rs. 4.50 lakh in 20 years' time if Rs 10 lakh is invested. So, a lower expense ratio helps you reap the sweet fruits of healthier returns in the long run with the power of compounding.


Do note that NAV of a Direct Plan is higher than a Regular Plan, but the portfolio of a scheme is the same for a Direct Plan and for a Regular Plan.



Disclaimer, Statutory Details & Risk Factors:


The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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