Have you invested in mutual funds? Yes? We couldn’t be prouder. If you haven’t, what’s stopping you? Several investors believe mutual funds to be one of the most sought-after investment options. If you do not have the same views, probably you have fallen trap to some of the myths prevailing around mutual funds. Let’s bust these myths and invest in mutual funds for a better and secured future.
Common mutual fund myths busted
Let’s look some of the most prevalent myths around mutual fund investments:
- Financial planning is a one-time game
Several investors have the misconception that once they have drafted a financial plan and invested in the right type of mutual funds, their job is done. But that is far from truth.It is important for investors to review their investments on a periodic basis. - If I want to invest in mutual funds, I must be rich
Several individuals have refrained from investing in mutual funds due to this common myth. However, with SIP investments, an investor can invest as low as Rs 100 per month in mutual funds. Thus, you do not have to be rich to invest in mutual funds. Just determinant and regular with your investments. - I’m too young to invest in the markets
This myth cannot be more wrong. It’s never too early to invest in mutual funds. The earlier you start, the better, as the more you’d reap the benefits of the power of compounding. Additionally, when you are young you are likely to not have any responsibilities or financial commitments, making it easier for young investors to invest in the markets. - I need to have abundant knowledge to invest in mutual funds
New to the world of investing with limited to no knowledge about the understanding and workings of the markets? Do not worry mutual funds have got you covered. Thanks to professional management, even novice investors can afford to invest in mutual funds who do not have the time and resources to constantly track their mutual fund investments. Thus, you do not have to be an expert to invest your money in mutual funds. - Mutual funds = equities
Several people hold this belief that mutual funds solely invest in equities and equities and related securities. However, that’s not true. Mutual funds can invest in other asset classes as well, such as debt funds or hybrid or balanced funds, etc. - Mutual fund investments are suitable for just long term investments
Though it is recommend to stay invested in the markets for a prolonged duration, you can invest in mutual funds to cater to your short-term needs as well. Depending on your financial goals and risk profile, you can invest in mutual funds either for short-term, or medium-term, or long-term duration. - If I have an emergency fund in place, I don’t need to plan for my retirement
Never mix your financial goals. Both emergency corpus and retirement fund are equally important financial goals. A retirement fund is to cater to your needs post retirement and to maintain the current standard of living even when you are not earning. On the other hand, an emergency corpus aims to cater to any unforeseen circumstances.