A study of investing in equity Mutual Funds as a tool for Wealth Creation

Abstract

The purpose of investing in any investment instrument is to channelize the savings into various newlineavailable investment options provided by the Indian financial system and seek to achieve newlinesuperior returns. Investing is also to meet future life goals and also importantly beat the newlinecontinuous threat from inflation that eats into the purchasing power of common individuals over newlinelonger period of time. The foundation of wealth creation is built on investing today to be able to newlinesuccessfully meet tomorrow s life goals for which prudent choices of investment instruments newlinebecomes integral part of the process. One of the important investment instruments is equity newlinemutual funds that was introduced in India as long ago as in 1963 but has not received newlineencouraging participation from a wider range of individual investors. The reason for this subdued newlineparticipation can be attributed to misconception and misunderstanding about mutual funds. Since newlineinvesting in equity mutual funds is subject to market risks, the endeavor has to be to overcome newlinethe risks by understanding the dynamics of mutual fund investing. With interest rates of newlinetraditional instruments such as fixed deposits, recurring deposits and post office savings going newlinedown over the years choosing equity mutual funds has not remained to be a choice, but a newlinenecessity. newlineBefore investing in equity mutual funds the investment horizon or the number of years an newlineinvestor has to stay invested to achieve superior returns or nullify the probability of losing is the newlinecrux of the matter to be able to encourage wider investor participation. The conviction of newlineinvesting in equity mutual funds increases for common investors if they understand the newlineinvestment horizon that they should choose to achieve wealth creation. This research study and newlineanalysis has endeavored to answer critical and long unanswered question on the investment newlinehorizon that investors should choose that negates the probability of losing and achieve superior newlinereturns compared to traditional investment instruments. newline