4 Common misconceptions about mutual funds
By investing in mutual funds online, you can grow your net worth, improve your standard of living, and secure your loved ones. As beneficial as it is for investors to explore mutual funds, many myths might reduce their confidence in them. Here are some of these myths and the truth about them.
Myth no. 1: Mutual funds are not safe
Many people believe that investing in mutual funds online comes with many risks and may not be suitable for risk-averse investors. However, it is important to know that mutual funds cater to all risk appetites. You can invest in high-risk mutual funds if you have a long timeline ahead of you and do not need the money immediately. Thanks to the power of compounding, your returns can be substantial with time, and the risk will also get distributed. There are also many low-risk options, such as debt funds that offer low to moderate risk. The choice of risk ultimately lies with you and depends on your financial goals.
Myth no. 2: Mutual funds require big lump sum investments
Mutual fund investments do not require a large investment, and you do not always have to invest in a lump sum. In fact, you can opt for a Systematic Monthly Plan (SIP) and start investing with as little as Rs. 100 per month. You can adjust the investment as per your income and other lifestyle needs.
Myth no 3: You need to be an expert to invest in mutual funds in India
Mutual funds deter most people as they feel they lack the relevant knowledge to invest in them. However, online mutual funds are the perfect investment for new investors as they do not require active management. The fund manager takes all the decisions on your behalf, and you do not have to do anything yourself. This is an ideal option for people who are too busy to manage their investments or are unaware of how the market works.
Myth no. 4: Mutual funds are long term investments
While investing long-term in mutual funds may be advised for better returns, it is not mandatory. There are many short-term mutual fund options for short or mid-term goals that you choose from. Mutual fund and SIP misconceptions have stopped many people from fulfilling their dreams. However, most of these myths have no real foundation. Keep in mind that mutual funds are a safe investment instrument that can be suitable for most investors. The returns are high over time, and they are easy to manage. So, go ahead and start investing in them online only on the Moneyfy app.