How mutual funds help in building wealth

1. Power of compounding

Mutual funds, especially equity funds, generate returns that compound over time. Starting early, even with small investments like ₹500/month via a Systematic Investment Plan (SIP), allows your money to grow exponentially.

2. Diversification reduces risk

Mutual funds invest in multiple stocks, bonds, etc. This spreads risk, minimizing the impact of a single stock's or bond's poor performance, making wealth-building safer by diversifying.

Equity mutual funds held over a year qualify for long-term capital gains tax benefits (12.5%), which is good compared to other options like bank FDs.

3. Tax efficiency

4. Affordable and flexible

SIPs allow small, regular investments, making mutual funds accessible to all. You can start with as little as ₹500.

5. Consult a qualified financial advisor

It’s always a good idea to have a qualified financial advisor to help you choose the right mix of mutual funds for your portfolio.