Quick and easy ways to invest in equity
The equity market has always attracted ambitious investors.
It comes with the possibility of making big money. But it also comes with high risks. Going in, this is something that you should know.
And if you want to invest in this high-risk-high-reward market segment, what are your options?
Now, if you want to invest in equity, directly investing in the equity stock market is one option
Direct equity investments
Here's what you'll need to invest in the stock market.
- A demat account
- A trading account
- A bank account
A demat account helps hold your shares in a dematerialized format. And a trading account helps you buy and sell equity shares via stock exchanges..
You need to approach a Depository Participant (DP) to open a demat account, and a stockbroker to open a trading account. Nowadays, many top stockbrokers are also registered as DPs, so you can get both these accounts opened in one go.
To invest in direct equity, you'll need to do a lot of research on your own. Reading a company's financial statements, analyzing the numbers, understanding annual reports and keeping up with the news - all of this is important.
Clearly, that's time-consuming. So, if you don't have the time, how else can you invest in equity?w that your house is safe and locked, you can peacefully go to work and earn money.
Here are two options:
- Equity mutual funds
- Unit Linked Insurance Plans (ULIPs)
Equity mutual funds
Mutual funds are investments that pool together the money collected from different investors, and then invest that money in different assets. These assets may be equity, debt, money market instruments and more.
Mutual funds that invest in equity shares are called equity mutual funds,. With us so far?
Now, it's easier to invest in equity mutual funds if you don't have much time to spare because equity mutual funds are professionally managed by fund managers.
Here's what fund managers do:
- They decide where to invest the pool of money
- They conduct all the in-depth research needed to make smart investments
- They keep track of how the market is performing
So, what does this mean for you? It means you can sit back, relax, and let your equity investments grow.
Equity mutual funds give you the following benefits:
- They are professionally managed
- You can start small and invest with as little as Rs. 500
- They help diversify your investment portfolio
- Special equity mutual funds called Equity Linked Savings Schemes (ELSS) give you tax benefits under section 80C of the Income Tax Act, 1961
At such times, you have to shell out money. Why take it out from your regular expenses and bank account, when you can set aside a small sum for it? Ideally, it should be enough to cover expenses for 3 to 6 months. But you can build it slowly. We can go through this in detail on a later date, if you want.
Equity funds give you the benefit of equity investments. But ULIPs? They give you the dual advantage of insurance + equity investments.
ULIPs are insurance plans that give you a life cover in addition to investment opportunities. These investments include equity mutual funds, debt funds or a combination of the two.
When you purchase a Unit Linked Insurance Plan, you can customize the investment part of the plan just like you customize the life cover. So, when you can purchase a ULIP, here's what you can choose as per your needs:
- The amount of the life cover
- The frequency of premium payment
- The option to add on riders
- The kind of funds you wish to invest in
To invest in equity via ULIPs, you simply need to choose equity funds when you purchase the plan. Once you've done that, you can sit back, relax. All you need to do is pay your premiums on time, so your policy does not lapse.
Unit Linked Insurance Plans give you the following benefits:
- ULIPs give you the advantage of insurance and investing
- They offer flexible investment options
- They help you take care of your long-term life goals
- ULIPs offer tax benefits1 under section 80C and section 10(10D) of the Income Tax Act, 1961
So, see how you can still invest in equity even if you don't have the time to actively participate in the equity market? Perhaps you could consider adding these investment options to your portfolio.
Read next: ULIPs VS. ENDOWMENT PLANS
Wondering how ULIPs are different from endowment plans? It turns out we have a blog on this. Check it out to know how these two types of insurance plans differ from each other.
HERE'S AN EASY WAY TO INVEST IN EQUITY!
Wealth creation just got easier, thanks to the ABSLI Wealth Infinia plan. With a choice of 5 investment strategies and 16 funds, this plan helps you create a legacy fund.
Who knew equity investing could be so simple, right?
IN ULIP, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
1Tax Benefits are subject to changes in tax laws. Please consult your financial advisor for more details.
ABSLI Wealth Infinia (UIN: 109L129V01) is a unit-linked non-participating individual life insurance savings plan.
The linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of the fifth year from inception. Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of the investment fund and factors' influencing the capital market and the insured is responsible for his or her decision. Aditya Birla Sun Life Insurance Company Limited is only the name of the Insurance Company and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document. The various funds offered under this contract are the names of the funds and do not any way indicate the quality of these plans, their future prospects and returns. The Past performance of the Unit linked fund(s) of the company is not necessarily indicative of the future performance of any of these Unit linked fund(s).
ABSLI Life Shield Plan
A term insurance plan that offers you the flexibility of plan options suitable for your family's non- negotiable goals and ensure they need not compromise on their lifestyle. UIN: 109N109V04
- Choice of 8 plan options
- Cover your spouse under the same policy
- Longer Life cover till age 85
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