10 Reasons to Invest in Equity Market

Many women are starting to realize the potential of equity market investments, but there are often doubts about how to begin or whether it’s worth it. If you’re looking to grow your wealth, understanding why to invest in equity market and how it works can be a game-changer. This blog post will walk you through 10 solid reasons why women, just like you, should consider investing in the equity market.

What is the Equity Market?

The equity market refers to the platform where stocks (or shares) of companies are bought and sold. Investing in the equity market means you’re purchasing a stake in a company, which gives you a chance to benefit from its growth through:

• Capital growth (increase in stock price)
• Dividends (profit sharing by companies)

There are two main ways to invest in the equity market:

1. Direct Equity (Stocks): You buy individual company stocks, becoming a direct shareholder. This requires market knowledge, research, and regular monitoring.
2. Equity Mutual Funds: A fund manager invests in a diversified portfolio of stocks on your behalf, reducing risk and simplifying investment.

Equity mutual funds are often a smarter option than direct equity because they offer diversification, professional management, and lower risk, making them ideal for both new and experienced investors. More reasons to consider equity mutual funds are as follows:

1. Potential for High Returns

One of the biggest reasons to invest in the equity market is the potential for higher returns. Historically, equity funds in mutual funds have outperformed most other investment avenues like fixed deposits or real estate. 

For instance, the average return from the equity market in India has been about 12-15% annually over the long term. This beats inflation and allows you to grow your wealth at a much faster rate.

2. Easy to Get Started

Gone are the days when investing in the equity market was difficult. Today, investment platforms like Lxme make it easy for women to invest in equity via mutual funds with as little as Rs.100/-. With just a few clicks on your smartphone, you can begin your investment journey without needing to be an expert in stock market.

3. Power of Compounding

Compounding is often called the eighth wonder of the world. By reinvesting the returns from your equity market investment, you can multiply your wealth exponentially over time.

For example, if you invest lumpsum ₹100,000 in an equity mutual fund that returns 12% annually, after 10 years, your investment would grow to around ₹310,000. The longer you stay invested, the more powerful compounding becomes.

4. Diversification Reduces Risk

Another reason to invest in equity market funds is diversification. Equity market investments don’t just mean picking a single stock. By investing in equity funds in mutual funds, your money is spread across a variety of companies. This reduces the risk because if one company’s stock drops, others in the fund can still perform well.

5. Beat Inflation

Inflation can eat the value of your savings. In simple terms, things become more expensive over time. Investing in the equity market helps protect your money against inflation. Since equity investments have the potential to generate higher returns than inflation rates, they help you preserve and grow your wealth.

6. Regular Income Through Dividends

Did you know that some companies pay out a portion of their profits as dividends? These dividends can be reinvested to further grow your investment or be used as a source of regular income. Many equity funds in mutual funds provide a consistent dividend payout, allowing you to benefit from your investment even without selling the shares.

7. Tax Benefits

Besides earning returns and dividends, equity investments also come with tax advantages, particularly long-term investments in stocks. If you hold your equity investments for more than a year, you pay lower tax rates on the returns. This can result in substantial tax savings over time, further enhancing your investment returns.

8. Liquidity: Easy to Buy and Sell

Unlike real estate or physical gold, which may take time to sell, equity market investments are highly liquid. You can buy and sell your investments easily, and the money gets credited directly to your bank account within 2-3 business days. This gives you more flexibility and control over your finances.

9. Flexible Investment Options: SIP & Lump Sum

Equity investing offers flexibility with SIP (Systematic Investment Plan) and Lump Sum options.

• SIP:Invest small amounts regularly, which helps manage risk and build a habit of consistent investing.
• Lump Sum: Invest a larger amount at once, ideal for market dips or long-term growth opportunities.

Choosing the right approach depends on your financial goals and risk appetite, allowing you to tailor your investment strategy for maximum returns.

10. Build Wealth for the Future

Equity market investments are a long-term strategy. By investing early, you have the opportunity to build wealth for your future goals, whether it’s for retirement, your children’s education, or starting a business. It’s a smart way to secure your financial future, giving you peace of mind that you’re prepared for the years ahead.

Why Equity Funds Are a Great Choice for Indian Investors

The benefits of equity funds in India include high growth potential, often outperforming traditional options like fixed deposits. These funds are managed by experts who make smart investment decisions to maximize returns.

Another major advantage is affordability—you can start with just ₹100. Platforms like Lxme which offer investments for women, make it even easier for women to invest in equity funds, offering flexible options like SIPs (Systematic Investment Plans).

With these benefits of equity funds in India, they are a great choice for women looking to grow their wealth and achieve financial independence.

Final Thoughts

Now that you know why to invest in equity market, it’s time to take action! Investing in the equity market, especially through equity mutual funds, is one of the smartest ways to build wealth over time. At Lxme, we’re committed to empowering women with the knowledge and tools they need to succeed in the world of finance.

So, what are you waiting for? Start investing today, and take the first step toward securing your financial future with Lxme!

FAQs

Further Read,

• How to Invest in Equity with Just Rs. 100?
• 10 Ways to Improve Your CIBIL Score Quickly
• What is the difference between SIP and Mutual Fund?