Mutual Funds – Myths vs Facts

One of the biggest hurdles in the investing journey is getting over the myths that bear no foundation or truth. Most common mutual fund myths usually affect your plans to invest in mutual funds. Whenever you are about to make any investment decision in mutual funds, these common mutual fund myths become the main hurdles in your mutual fund investment journey. Due to this, many people are not able to make the right investment decisions required to achieve their financial goals.

To have a good investment experience, achieve financial goals and create wealth; investors should be able to bust the myths.  So, in this blog, we have collated a list of some of the most prominent myths surrounding mutual funds and share the relevant facts regarding it.

Myth 1: Mutual Funds are only for long-term investing.

Fact:

You can do goal-based investing in mutual funds. Your goal tenure can be short-term, medium-term or long-term. Mutual funds have different schemes around various investment objectives and horizons. You can also invest in mutual funds for ultra-short goals (ultra-short debt funds) or emergency corpus creation (liquid funds).

However, mutual funds are known for the high returns that they provide by the power of compounding and which works when you are in it for the long term.

Based on your needs, you can choose from a variety of mutual funds. For example, if you are looking for a short and medium-term investment opportunity, debt funds are more suitable for you. However, long-term investment calls for equity funds.

Myth 2: Investing in Mutual Funds is same as investing in stocks.

Fact:

Mutual Funds have a diversified portfolio and invest in equity shares, government treasury bills, commercial paper, gold, company deposits, real estate, etc.

Mutual Funds allow investors to build diversified financial portfolios through exposure to a variety of asset classes. You can invest in any of these assets or a combination of them through mutual funds, based on your goals, tenure and risk appetite.

Myth 3: Mutual Fund investments are only for experts.

Fact:

Mutual fund investment is actually one of the ideal investments for all those who have little knowledge of the financial market. That is why it is always advisable by financial experts at Net Brokers to start your investment journey with mutual fund investments.

If you are planning to invest on your own, you may put your portfolio at risk due to little knowledge about where to invest. On the other hand, mutual fund investments are managed by experienced fund managers as well as expert financial analysts on your behalf, and investing in the right mutual fund aligned to your investment horizon and risk appetite can help you reach accumulate desired corpus required to achieve your financial goals.

Myth 4: You need a demat account to invest in mutual funds.

Fact:

You do not need a demat account to invest in mutual funds. By filling up the application form and ensuring that you are KYC compliant, you can choose the fund and start your investment journey. However, to ease the process of investing and get better guidance, you can download the Net Brokers app which can facilitate your investment offering features like video KYC, financial calculators and get in touch with our team to help you choose the right funds suiting your investment profile.

Myth 5: Too young to start investing.

Fact:

On the contrary, the early you begin investing, the more wealth you can accumulate with the power of compounding working on your side. There’s no “Too Young” when investing in mutual funds. The expert analysts and portfolio managers managing mutual funds enable anyone with an intent to start investing irrespective of their age, experience, and profession.

Net Brokers believe that it is better to invest in mutual funds from an early age via Systematic Investment Plan (SIP) and gradually increase the SIP amount with rising income. That is because it allows you to remain invested in the market for an extended period and have time to your advantage giving you the dual benefit of rupee cost averaging and power of compounding.