A mutual fund is an efficient financial instrument suited for nearly every type of investor. It’s a great way to save for retirement, buy a home, prepare for your children’s education, and other long-term goals. Mutual funds are becoming recognizably popular in the country. However, like with everything popular, several investment-related myths surround them. These may perplex, mislead, or even frighten you away from mutual fund investments. Consequently, it is critical to refute them to make informed decisions.
Here are some common myths that revolve around mutual funds that you should stop believing:
Investment in mutual funds equals guaranteed returns
While mutual funds can provide significant profits, there is no guarantee for the same. These funds are susceptible to market risks. As a result, market ups and downs may affect their performance. There are several kinds of mutual funds, including equity, debt, and hybrid, each with a distinct level of risk. Remember, the greater the risk, the greater the expected reward. However, you should not pick a mutual fund only based on its high-return claims. Before investing in a specific fund, you should examine its previous track record.
You must invest a considerable amount in mutual funds
This is one of the most common mutual fund-related misconceptions. You don’t need to invest a lot of money in mutual funds to receive a good return. Some plans allow you to begin with as little as Rs. 100. To build wealth in a disciplined manner, you can invest through a SIP; or invest a lump sum. Furthermore, there is no maximum investment limit.
Mutual funds are intended for long-term investments
There is a widespread misconception that mutual funds are only suitable for long-term investing. Staying invested for a longer period will indeed let you have compounding rewards. However, it is not necessary. You may discover a wide range of mutual funds online with various maturities and time horizons to fit your short-term, long-term, and mid-term goals.
Be an expert to invest in mutual funds
Mutual funds are meant for common investors. You may invest in them even if you are unfamiliar with the financial market. The Asset Management Company appoints fund managers who are in charge of actively managing the mutual funds. These experts carefully invest the funds of their clients in a variety of assets. They are constantly analyzing market trends and attempting to generate profits, so you don’t have to.
Now that you’re aware of the common myths, don’t let any of them prevent you from investing in mutual funds. They are an excellent investment vehicle that provides flexibility, liquidity, and accessibility. In fact, with a host of verified online investment, you can start investing in mutual funds online with only a few taps on your smartphone. Tata Capital Moneyfy app can be the perfect tool for investors to manage their funds more optimally and derive more returns from it.