Any investment requires careful assessment and meticulous planning, and mutual funds are no different. Whether a first-time investor or an expert, you must prepare with ample knowledge about mutual funds and steer clear of misconceptions and half-baked truths. While expert fund managers can manage your funds and make investment decisions on your behalf, you mustn’t remain in the dark. Come, let’s bust some popular myths surrounding mutual funds.
You need a large sum to invest in mutual funds.
Fact: The truth is, you don’t need a hefty sum of money to begin investing. You can start with sums as low as INR 500 through SIP. Mutual funds in India don’t have an upper limit to the investment, so you can start with as little as you please or comfortably.
Mutual funds require long-term investments.
Fact: It goes without saying that the longer you invest, the better the returns. Mutual funds have many variants, such as debt, equity, and hybrid. So, it gives every investor, whether short, medium, or long-term, the option of investing based on their choice of time frame, risk appetite, and tolerance. Sometimes, liquid funds or short-term debt can provide better returns than other instruments, such as recurring or fixed deposits.
Mutual funds are just limited to equities.
Fact: Mutual funds have several categories that allow you to invest your capital in various instruments, such as debt, equity, and hybrid, as mentioned earlier. Most mutual funds are debt compared to equity. You or your fund manager can invest according to your financial goals and risk-taking capacity.
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All mutual funds are risky.
Fact: You heard the common phrase, “Mutual funds are subject to market risks.” Risk is a prominent factor while investing in any instrument. The misconception with mutual funds is that they’re high risk, and you can face-cussed earlier; there are different categories, and the risk involved in each is additional. Invest wisely by looking at the class and the type of scheme.
Mutual funds are unsuitable for beginners.
Fact: Any form of investment is unsuitable or risky without appropriate knowledge. Mutual funds have higher transparency, so you know how and where your funds are invested. Moreover, you can contact proficient and experienced fund managers or work through apps that help you create wealth or achieve your financial goals. Try DIY or Online Mutual Funds investment apps like Moneyfy, which will help you get started with mutual funds and guide you every step as you watch your money grow. Having little or no knowledge should not hold you back from investing. Don’t let incorrect myths hold you back from investing.
