Routes For Using Equities

Routes For Using Equities For Retirement

Equities can be used for the purpose of retirement planning in several ways. The most common one is to invest directly into equities and hold shares in the name of the individual. Here, the person buys the shares in his own name and earns the dividend on the shares. The holder also bears the capital loss or enjoys the capital gains made on the fluctuation of share prices. Long-term holdings where the shares are held for years on end can provide the required amount for retirement.

Another way of using equities is through the mutual fund route. There are equity-oriented mutual fund schemes that invest in the equity shares of various companies depending upon the investment mandate available. Here, the individual enjoys the benefit of diversification as well as the ability to invest small amounts when they have the required funds. There is also good liquidity in the open-ended schemes present in the market and these are also becoming a major route of investment for individuals.