Bursting Common Myths About Mutual Funds

Are you thinking of investing in mutual funds but are concerned about myths? Let's take a look at the facts of mutual fund investment.

Myth 1: Mutual Funds Are for Experts

Fact:  All investors, particularly those with little prior expertise with the markets, should invest in mutual funds. When investors invest in mutual funds managed by competent fund managers, they can have access to expert management at a low cost.

Myth 2: Mutual Fund Investments are Only for the Long Term

Fact: Mutual funds serve a wide range of financial objectives, including short- and long-term aims. By investing in mutual funds, investors can reach their goals, whether they are long-term savings or short-term profit.

Myth 3: Mutual Funds are Equity Products Only

Fact: Mutual funds invest in a wide range of securities, such as equities, bonds, and money market instruments. Mutual funds give retail investors access to a lot of marketplaces, which helps them increase their opportunities as well as diversity.

Myth 4: NAV Determines Mutual Fund Performance

Fact: A mutual fund's net asset value (NAV) shows the value of its underlying investments; this metric has no direct influence on returns. Pay more attention to the fund's investing strategy and performance than its NAV.

Myth 5: Large Investments are Required for Mutual Funds

Fact: Mutual funds are accessible to all investors, with minimum investment amounts as low as ₹5000 for lump-sum investments and ₹500 for SIPs. You can start small and build your investment over time.

Myth 6: A Demat Account is Mandatory for Mutual Fund Investments

Fact: Demat accounts are optional for the majority of mutual fund investments, but they are necessary for other schemes, such as Exchange-traded funds (ETFs). Investors have a flexible option to choose between demat and physical statement types.

Myth 7: High NAV Indicates peak performance

Fact: A fund hasn't peaked just because its NAV is high. It displays both the market value and historical performance of the fund. Investment portfolios are actively managed by fund managers, who buy and sell stocks in reaction to market circumstances.

Myth 8: Top-Rated Mutual Funds Guarantee Better Returns

Fact: While a mutual fund's net asset value (NAV) represents the value of its underlying investments, results are not directly influenced by this metric.

Don't let misconceptions deter you from expanding your knowledge about mutual funds. Making the appropriate investing decisions can help you reach your financial objectives if you have the necessary knowledge. Take off right away using mutual funds!