There are a lot of myths about Mutual Fund investments prevalent among people. To have a good investment experience, achieve financial goals and create wealth; investors should be able to bust the myths. Here we mention 5 Key myth busters around Mutual Funds;
Myth: Only Veteran Investors should invest in Mutual funds
Reality: In fact, Mutual funds are good for common investors who may lack the knowledge or skill set to invest in securities market. Mutual Funds are professionally managed by expert Fund Managers after extensive market research for the benefit of investors. Even Novice Investors can start their investment journey with Mutual Funds. Simply contact your financial distributor to get started.
Myth: Mutual Funds are only for the long term
Reality: We all know that mutual funds can provide high returns when we keep invested for long term. But this is the case for equity mutual funds only. It is only a myth that mutual fund investments are only for long-term investors. The other type of Mutual Funds like debt and liquid fund allows investors to invest for as minimum as a day. So, we can say that Investors have a host of options to choose from, ranging from 1 day to 10+ years.
Myth: Mutual Fund is an Equity Product
Reality: Mutual fund schemes invest across different asset classes like equities, government treasury bills, corporate bonds, commercial paper, gold, real-estate etc. depending on the scheme type. In fact, mutual funds offer investors an opportunity to invest in a host of categories to build diversified portfolios through an exposure to multiple asset classes.
Myth: Lower NAV is better than higher NAV
Reality: The NAV of a scheme of mutual fund house is the net asset value of each unit of that particular mutual fund scheme. The performance of a scheme will depend on the performance of the underlying investments and not on the NAV of the scheme. For example: Suppose, scheme A has a NAV of INR 20 per unit and scheme B has a NAV of INR 100 per unit. You choose to invest INR 10,000 in each scheme. You will be allotted 500 units in scheme and 100 units in scheme B. Now, assume that both the schemes appreciated by 10%. This means that the NAV of scheme A rises to INR 22 and the NAV of scheme B rises to INR 110. In both cases, you stand to gain INR 1000. Therefore, the current NAV of a scheme does not impact on its potential to generate future returns.
Myth: One needs a large amount of money to invest in mutual funds
Reality: Lumpsum investment starts with Rs. 5000 and SIP starts at just Rs. 500/month. Simply contact your financial distributor to get started.
These are the myths if busted, can generate high returns to the investors. Contact your financial distributor for more details.