Consequently, is it safe to invest in equity funds?
In a nutshell, mutual funds are safe. Investors should not be worried about short-term fluctuations in the returns while investing in them. You should choose the right mutual fund, which is sync with your investment goal and invest with a long-term horizon.
Additionally, can you lose all your money in a mutual fund? There is no guarantee you will not lose money in mutual funds. In fact, in certain extreme circumstances you could end up losing all your investments. Mutual funds are managed by fund managers who invest in a wide variety of stocks, bonds and commodities. So, it's not that all of your mutual funds would fail.
Simply so, are equity funds high risk?
The level of risk in a mutual fund depends on what it invests in. Stocks are generally riskier than bonds, so an equity fund tends to be riskier than a fixed income fund. Plus some specialty mutual funds focus on certain kinds of investments, such as emerging markets, to try to earn a higher return.
How does equity fund work?
How an equity mutual fund works is actually quite simple. You give money to a fund, and the fund invests this money in stocks. The gains or losses, whatever they may be, accrue to you. Equity funds are legally permitted to charge up to 2.25 per cent per annum of the money it manages as its expenses.
