Mutual Fund Myth busters

Mutual funds have been around for a while. They’re an excellent tool for the public to invest their savings in well-researched assets that can provide growth opportunities. However, there are certain myths around them. While some investors think that mutual funds require large sums of money to be invested in them, others believe mutual fund schemes are only for long-term investors. This article demystifies some of the misconceptions about mutual funds.

Myth #1: Mutual funds are for experts

Fact: An expert fund manager researches and tracks various stocks, sectors and other asset classes along with a team and invests the money you’ve put into the mutual fund

Myth #2: Mutual funds are the same as Equity

Fact: While Mutual funds that invest in Equities can be considered as good as getting the same kind of exposure to Equities as in direct investing, Equities is not the only category of mutual funds. There are also Debt mutual funds and multi-asset mutual funds that invest in at least 3 asset classes.

Myth #3: You need a large sum of money to invest

Fact: If you’re doing a systematic investment plan, you can invest as low as Rs. 100 in a SIP 

Myth #4: Mutual funds are only for the long-term

Fact: Equity Mutual funds are for the long term, but there are some debt schemes that are suitable even for those investors looking to park their money for just 1 day or 1 week as well

Myth #5: Are more Mutual funds in a portfolio better

Fact: 3-5 mutual funds are enough as per your investment objective. Investing in several mutual funds can cause difficulty in tracking and stock overlap, as some mutual fund schemes may own the same stock. 

 

Disclaimer

Mutual fund investments are subject to market risks, read all scheme related documents carefully.