4 Myths of Mutual Funds Busted

Usually, Mutual Fund is considered to have risks involved in investing. It is taken as an option related to Equity markets only.

Usually, Mutual Fund is considered to have risks involved in investing. It is taken as an option related to Equity markets only. But, the truth is that there are a lot of promises that Mutual Funds hold for an investor to be assured of a secured future. One only needs to have clarity about the facts and factors around it. For instance, there are mutual funds, known as debt funds that don't invest in equities, rather invests in bonds issued by banks, government bodies, companies and money market instruments. These funds have a lower risk. Then there are hybrid funds that invest in a mix of both equities and bonds. Thus, there is immense scope for investors to explore the mutual fund investments and choose the right category as per their financial requirements.

Apart from that, there are many wonderful features of mutual funds that make them an ideal investment choice. 

Diversification: Mutual Fund investments minimize risks through portfolio diversification.

Easy to Start: You can start your investments even with an amount as small as INR 500/ 1000.

Transparent: Mutual funds performance is a matter of public record, anyone can track the performances of the funds before and after investing.

Liquidity: Open to quick exit and easy selling of units

Tax Friendly: Mutual Fund investments are tax-effective

Professional Management:  Mutual fund portfolios are managed by professional money managers

Reinvest: There is the flexibility of reinvesting dividends

Let us now help you with breaking the most common myths related to Mutual Funds:

  1. Mutual funds myths: The greatest Mutual funds myths perhaps is that mutual funds block the money for many years.

    Reality: Mutual Fund investments have liquidity. If you choose open-ended funds, then you can withdraw your money at any point in time.

  2. Mutual funds myths: In general, people think that it is mandatory to have lump-sum money to invest in Mutual Funds.

    Reality: Through Systematic Investment Plan i.e. SIP, you can start investing in mutual funds with the amount as small as Rs 500.

  3. Mutual funds myths: Mutual Funds Investment requires timing the marketplace, and that is why it is not a good investment option for those who have no knowledge about the market.

    Reality:Investing in Mutual Funds through Systematic Investment Plan (SIP) makes you free from the need for timing the market. 

  4. Mutual funds myths: Many people think that Mutual Fund investments are for the long-term only.

    Reality:Mutual Fund investments can even be held for short to medium terms using debt schemes such as liquid funds, ultra-short term funds, short to medium-term debt funds.


Disclaimer:

Mutual Fund Investments are subject to market risks. Please read the documents carefully before investing.