5 Common Misconceptions about Mutual Funds in India


Any investment requires careful assessment and meticulous planning, and mutual funds are no different. While expert fund managers can manage your funds and take investment decisions on your behalf, you mustn’t remain in the dark. Whether you’re a first-time investor or an expert, you need to prepare yourself with ample knowledge about mutual funds and steer clear of misconceptions and half-baked truths. 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 comfortable.

Mutual funds require long-term investments.

Fact: It goes without saying that the longer you invest, the better the returns. But there are many variants in mutual funds, 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, which invest your capital in various instruments like debt, equity, and hybrid, as mentioned earlier. In fact, most of the mutual funds are debt as compared to equity. Based on your financial goals and risk-taking capacity, you or your fund manager can invest accordingly.

Mutual Funds

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 have the chance of facing huge losses. As discussed earlier, there are different categories, and the risk involved in each of them is different. Invest wisely by looking at the category and the type of scheme.

Mutual funds are unsuitable for beginners.

Fact: Any form of investment is unsuitable or risky without appropriate knowledge. With mutual funds, there’s 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. Having little or no knowledge should not hold you back from investing. Don’t let incorrect myths hold you back from investing. Try DIY or Online Mutual Funds investment apps like Moneyfy, which will help you get started with mutual funds and guide you at every step of the way as you watch your money grow.

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Communicator. Alcohol fanatic. Entrepreneur. Pop culture ninja. Proud travel enthusiast. Beer fan.A real dynamo when it comes to buying and selling sheep in Nigeria. Spent 2002-2007 licensing foreign currency for fun and profit. Spent 2001-2007 selling heroin in the financial sector. Developed several new methods for buying and selling jungle gyms in the UK. Prior to my current job I was investing in pond scum in Hanford, CA. Garnered an industry award while working on jump ropes in Salisbury, MD.