Equity mutual funds Everybody often goes gung-ho with equity mutual funds to generate wealth for children. However, this has some risks. The problem is one is not sure at the time of redemption or if your child needs the money, how the markets would be. For example, if you want to redeem all your units in 2030 to meet a child need you are not sure if the markets would be buoyant at that time. However, many equity mutual funds have beaten returns from even bank deposits and have given sizeable returns.
So, if you are a long term investor, these tend to give you returns like no other. If you are planning to save money for your children’s education or other such plans, look no further then equity mutual funds. The income distributed by equity mutual funds would now be subject to tax, so your overall returns could reduce. So, one as to be really careful before choosing equity mutual funds. Be warned that these are risky and there is no certainty that at the time you want to redeem the markets would be high. A slightly more risky child investment plan to consider.