Myths and Facts about investing in Mutual Funds - Part III

 Myth 9 : One must invest in several mutual funds to avail the advantage of diversification 

Fact: Mutual funds by itself invest across asset classes like equity, debt and market instruments, which give investors with the advantage of diversification of risk. In mutual funds, investors can diversify their portfolio basis their risk appetite and alter it from time to time, whenever and wherever necessary.

Myth 10 : Buying top rated mutual funds guarantees better returns 

Fact: open-end fund performances are subject to plug risks and should vary from time to time. Thus, it's not certain that a fund which will have performed well within the past will do so within the future also . Investments in mutual funds got to be tracked and reviewed from time to time to make sure it's performing as per the necessity of the investor.

Myth 11 : you would like a demat account to take a position in mutual funds 

Fact: you are doing not need a demat account to take a position in mutual funds. By filling up the appliance form and ensuring that you simply are KYC compliant, you'll choose the fund and submit a cheque to form the investment. However, to ease the method of investing and obtain better guidance, you'll engage a financial adviser throughout.

Myth 12 : Mutual funds are unsuitable for beginners 

Fact: Any investment, if avoided appropriate knowledge are often dangerous. Mutual funds offer high transparency with reference to where and the way the funds of the investors are invested. New investors could consider starting an SIP during a open-end fund , through which they might invest small regular amounts monthly and gradually increase overtime. Financial advisers should be consulted for professional advice in investing, reviewing and tracking the performance of the mutual funds.