Equity mutual funds for long-term goals

The greatest problem that your investments have to solve over the long term is inflation. You have the lethal combination of inflation and interest rates. This means that inflation-adjusted interest rates that we earn from fixed-income investments like deposits, etc., are actually negative when compared to the real inflation rate that consumers face. What is worse is that at this juncture, the economic management of our country is such that neither of these problems is going to get solved in a hurry. It could well be years before fixed-income returns rise above the inflation rate in any meaningful way. For investors who need to preserve and grow their money, this presents a great dilemma. Equity is one asset that has the potential to beat inflation to earn real returns. It is for this reason that your portfolio should have a significant exposure to investments in equity. However, there's a problem with that. For the normal Indian investor, investments in equity is psychologically the equivalent of risk. The risk of losing their money w

This article was originally published on April 24, 2020.