Mutual Funds: Do you also believe these 10 Myths related to Mutual Funds to be true?

Mutual Fund myths: Even today, people in India live with many misconceptions about mutual funds. Some people think that it is only for experts, some think that lakhs of rupees have to be invested in it. At the same time, many people consider it risky, like the stock market, and stay away from it. The truth is that mutual funds can be understood in very simple language, and they are made for the common investor. If you are also thinking of investing, but some myths are stopping you, then this article is for you. Here we are explaining to you the 10 biggest myths related to mutual funds and the reality behind them in very simple words.

Mutual Funds are only for experts.

Many people believe that investing in mutual funds is very complicated and only financial experts can understand it. Whereas the reality is the opposite. Mutual funds are designed for common investors only. Here, fund managers do research, select shares, and invest at the right time. This means that your hard work is saved, and the experts work on your behalf.

A large amount is required to invest in mutual funds
This is the biggest misconception. People think that lakhs of rupees are required to invest in mutual funds. Whereas you can start with just ₹ 500 per month SIP (Systematic Investment Plan). Gradually, this amount takes a bigger form, and a good corpus is formed over time.

Mutual funds give guaranteed returns.
Many people consider mutual funds to be like fixed deposits (FD) and think that it will give guaranteed returns. Whereas it is not so. Mutual funds are linked to the market, and their returns can go up and down. Yes, in the long run, they can definitely give better returns by beating inflation.

Mutual funds mean only equity funds.
People think that mutual funds only mean investing money in the stock market. Whereas the truth is that there are many types of options available in it – debt funds, hybrid funds, index funds, and liquid funds. That is, there are options available according to your risk appetite and goals.

Doing SIP eliminates risk.
SIP is a great way of investing because it reduces the risk of market timing. But it is not true that SIP eliminates risk. You get the benefit of SIP only if you continue it for a long time and choose the right fund.

Old funds with good returns will always be good.
Many people think that if a fund has given good returns in the past years, it will continue to do so in the future too. But this is not necessary. Before investing, you should also look at factors like consistency, fund strategy, expense ratio, and management.

Mutual funds are only for tax purposes.
This is also a big myth. Mutual funds like ELSS (Equity Linked Saving Scheme) give you tax benefits under Section 80C. But the purpose of mutual funds is not just to save tax, but also wealth creation.

Mutual funds are only for the long term.
Yes, indeed, mutual funds work better in the long term, but that does not mean that you cannot use them for short-term goals. Liquid funds and ultra-short funds are also good options for short-term goals.

Mutual funds cause losses only when the stock market falls
People fear that mutual funds will also sink when the market falls. Whereas there are different categories of funds - like debt and hybrid funds, which are considered safer than equity funds.

Mutual funds are only for the rich.
This is the biggest misconception. Mutual funds are made for the common man. You can start with a small investment and create a good fund for bigger goals like children's education, buying a house, and retirement.

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