5 Misconceptions about Mutual Funds in India

Mutual fund misconceptions have stopped many an investor from reaping the benefits of the MF market. It’s time to quell all myths, once and for all. Read on to know all about the top five misconceptions about the MF market.

#1 Only market-savvy investors can invest in the MF market

On the contrary, it works the other way around – you start investing and get better along the way. The market is designed to support the financial needs of common investors like yourself. Just like you do for any other product in the market, research all you can about the MF market, different types of funds available, their features and suitability, past performance, and weigh them against your personal investment goals. This will help you build a lucrative portfolio.

#2 You need to invest a large sum of money

If you have Rs. 500 to spare per month, you can become a mutual fund investor today! Systematic Investment Plans (SIP) allow investors to begin their journey with even small amounts instead of demanding a lump sum. In this way, you can reach your financial goals with small, steady steps.

Additional Read: Mutual Fund Fact Sheet: Key Information It Holds

#3 You NEVER lose money in SIP

Though it is true that Systematic Investment Plans offer good long-term returns and spread out the risk evenly, no investment option can be classified as 100% safe. Your choice of funds will play a key role in determining your returns. Ensure that you create your portfolio to be well-aligned with your risk profile and investment goals, and you should do good.

#4 It’s all about the equity market

Perhaps, the most widely believed myth about MFs is that they only invest in the equity market, which is tossed to and fro by market turbulence. This is perhaps why a lot of people shrink back from investing in the MF market. The truth is that assets are also invested in the less risky debt funds and other money market instruments. You can choose mutual funds based on your personal financial goals, risk profile, and other needs.

#5 Exiting the MF market is challenging

Liquidating your funds is not as difficult as you think. Many investors fear that liquidating early may attract hefty fines, but this is simply not true. For instance, debt funds are the most liquid and can be chosen for short-term investment needs. In fact, you will find many open-ended schemes that don’t mandate a lock-in period, allowing you to withdraw your investment at any time. 

Additional Read: Importance of Mutual Funds

Bottom Line

Now that you know about the myths, are you ready to start investing in the MF market? If yes, then start right where you are by downloading Tata Capital's Moneyfy app. Use this app to compare different funds, understand the top performing ones, and to create a portfolio that aligns well with your risk profile and investment goals.