Over the past two decades, investment in Mutual Funds has become extremely popular in India. Many investors have begun understanding the growth potential they possess for the long run. Investors have also started understanding how mutual funds can beat the inflation growth rate in the long run, which is crucial for the maximization of your savings.
On one end, we have a growing list of investors choosing Mutual Funds as their primary investment option in India. On the other end, there is another list of prospective investors who are too overwhelmed by mutual funds and do not want to invest in them as they find them too risky.
You might have heard many myths and stories from your friends, family, colleagues, and neighbors about stock markets and Mutual Fund investments being highly risky. Most likely, all these stories or myths might have surely kept you away from the taking advantage of the growth potential of Mutual Funds.
Let us now look at 4 of the most common myths that you feel are true about Mutual Funds investment:
1. Mutual fund investment is for gamblers
Please understand one thing straight. If you want to hedge a bet or win a fortune, try the Russian roulette at a casino in Las Vegas. Mutual funds are not for you. Please understand that investment in mutual funds in India is a simple, systematic, and logical process. Moreover, it is not any different from starting a new business venture. For starting your mutual fund investment, you need to have a comprehensive strategy in place. Furthermore, your strategy must be supported by some smart and timely decision-making as well. Mutual fund investment is a long-term process.
You must align all your Mutual Fund investments to your financial objectives, risk propensity, and investment horizon. With that much strategic planning, where are you gambling? A proven science, strategic mutual fund investment helps you build your financial corpus for accomplishing your financial goals at different periods of time by fighting growing inflation. Therefore, don’t let myths such as mutual funds are for gamblers to keep you away from investing in them.
2. Only the rich can invest in Mutual Funds
Oh, Come on! That’s definitely not true. Haven’t you heard of mutual fund investment through SIP? You can invest in Mutual Fund SIP with amounts as small as Rs. 500 or Rs. 1000. This is an absolutely baseless myth. Mutual funds will never discriminate between the rich and the poor. All they do is work on certain basic market and investment fundamentals to help you build a larger corpus in the long run.
3. Have to be an investment wizard to benefit from Mutual Funds
Now that you have read myth # 2 above, do you really think you need to be an investment wizard to invest in a Mutual Fund SIP of Rs.500 or Rs.1000 per month? Always remember that mutual fund investment is a science. It operates the same way for a small or a big investor. The success of your mutual fund investment depends on your financial plan, time horizon, and risk profile. It’s as simple as that. Get as much information as you can on the fundamentals of the mutual fund, financial indicators, and historical performance. You can browse the Internet for all that information for making well-informed investment decisions in mutual funds.
4. Mutual Fund investments are bound to drop
Mutual Fund investments will defy Newton’s law of gravity. In case of a mutual fund, what goes up, need not necessarily come down in all circumstances. The ups and downs of a Mutual Fund are dependent on the course the stock markets take. This can be determined purely by some major factors and market fundamentals, and nothing else. Please note that the mutual fund investments as well as stock markets do not operate on myths. They operate on facts and fundamentals as part of a well-defined scientific process.
Mutual funds are impacted by many factors such as the economy, market fundamentals, consumer behavior, industry trends, inflation, and other factors that lead to stock prices rising and falling. One thing you must note in case of Mutual Funds is that the stronger the company, the stronger its fundamentals, more experienced its senior management team, maximum are the results for you. It’s as simple as that. In case you are confused about making choices on your own, take advice from an experienced stockbroker.
For more information on investing in Mutual Funds write us at [email protected]
Mutual fund investments are subject to market risks. Please read the offer document carefully before investing.