Are you fairly new to the investing world? Chances are you might find yourself scratching your head over the dilemma of whether you should invest in mutual funds or not. If you haven’t planned on investing in mutual funds, odds are you are a victim of myths concerning mutual funds investment. A mutual fund is undeniably one of the best investment tools available to investors for creating wealth. However, basis a recent report by the mutual fund regulator – Association of Mutual Funds in India (AMFI), just 1.5 percent of the Indian population decided to invest in mutual funds. This could be because Indians are known to be conservative investors who invest a huge chunk of their money in low-risk investment options such as bank fixed deposit (FD), gold, etc. These investors usually toss mutual funds as risky investments with no guaranteed returns. However, these mythologies often rip investors of the potential to create wealth. This article aims to bust top mutual fund myths prevailing among investors:
Myth no 1. Invest in top-ranked funds equals reap substantial returns
Mutual fund investments are subject to market risk and the returns depend on the performance of the stock. Mutual fund markets are known to be quite volatile. This means that the placement of your schemes could or could not vary, conditional on the market scenario. So, the top-ranked mutual funds might not be able to sustain the title in the future and vice-versa.
Myth no 2. Lower NAVs makes for better investments
NAV stands for Net Asset Value in mutual fund investment. Net asset Value (NAV) of a fund refers to the net value of a fund’s market holdings. It represents the fundamental value of a particular fund on a specific day. It is advised to instead look for the NAV deviation of a mutual fund scheme in a particular period.
Myth no 3. You need a significant amount to invest in mutual funds
This is a common conception among a vast chunk of investors. You don’t need to own a lot of money or have a high income at your disposal to invest in mutual funds. You can invest in mutual funds online as low as Rs 100 per month. You can easily achieve your financial objectives by regularly investing a small, insignificant amount over a prolonged period, thanks to rupee-cost averaging and the power of compounding.
Myth no 4. Stop SIP investment during a market crash
Just like to be completely cured, you must complete your entire course of medication, you must continue your SIP investment throughout its term until your financial goals are achieved. When the markets are crashing, do not pause your SIP investment, as it is a customized investment plan for the long term. A SIP investor is guided to stay invested without paying much regard to the market trends.
With the growing demand for your lifestyle, you should make enough efforts to secure your future. Investing in mutual funds helps an investor to realize their dreams. So be wise, and start investing today.