Myths and Facts about investing in Mutual Funds

Myth 1: you would like an outsized sum to take a position in mutual funds 

Fact: one among the prominent USPs of mutual funds is its incredibly low barrier entry. Through SIP(Systematic Investment Plan), you'll invest as low as Rs. 500 per month in mutual funds. therefore the concept you need a supposedly large sum to take a position in mutual funds may be a myth. Mutual funds have enabled students and entry-level professionals to venture into this previously inaccessible world of investments and financial planning. 

Myth 2: Mutual funds are riskier than shares 

Fact: Mutual Funds are the safer cousins of shares. While investing in individual shares, all of your eggs are within the same basket, but the core of mutual funds is to diversify your investment, making it the safer investment choice of the 2 . For example, as against riding all of your money on one horse, mutual funds invest your money in 20 different stocks. So you'll easily judge which is that the safer investment option. 

Myth 3: you want to have a DEMAT account to take a position in Mutual Funds 

Fact: you'll buy the mutual funds units either as a physical statement or dematerialized form. So, it's not compulsory to possess a Demat account for investing in mutual funds. 

Myth 4: Mutual funds are available just for the future 

Fact: Mutual funds are often long-term, short-term, or maybe medium-term, counting on your financial needs and investment objective. However, Mutual funds are known for the high returns that they supply by the facility of compounding which works once you are in it for the future . Based on your needs, you'll choose between a spread of mutual funds. for instance , if you're trying to find a brief and medium-term investment opportunity, debt funds are more suitable for you. However, long-term investment involves equity funds. Mutual Funds are best fitted to long-term investment. Long-term funds are known to supply multiplied returns. 

Myth 5: open-end fund investment features a lock-in period and one cannot redeem investment easily. 

Fact: Tax saving (ELSS) mutual funds and closed-ended mutual funds have a lock-in period, for other open-end fund investments there's no lock-in period. However, exit load could be applicable on premature withdrawal surely open-end fund investments supported the sort and period of your investment.