Are these myths derailing you from making an investment plan?
The penetration of mutual funds to retail investors has increased considerably in the last few years. Thanks to the high decibel campaign by industry body-Association of Mutual Funds in India (AMFI) and proactive regulator that make mutual fund investment easy and acceptable.
Nevertheless, when we compare it with other nations, we observe that a lot more ground needs to be covered as the penetration of mutual fund products is less compared to other nations. From an investor’s perspective, there are still various myths that create hindrances for investors to invest in mutual funds. Some of the most common myths are:
Investment procedure is cumbersome: Many investors still believe that they need to fill forms and attach a cheque to invest in their favourite fund. This is history and investing is just a few clicks away if you are KYC complied. If you have an internet connection, investing is as simple as that.
You need a Demat account: This is another myth that to invest in mutual funds you need to have a Demat account. Nonetheless, a Demat account is only required in case you are trading on stocks. For mutual fund investment, Demat is not required.
MFs are all about equity: There is another misconception that mutual fund is only about equity. However, mutual fund product also includes debt products as well as the combination of both equity and debt. Investors can invest based on their risk profile.
MF requires an investment of large amounts: Some potential investors believe that to invest in a mutual fund, you require a large amount. However, the fact is that you can start investing in mutual funds (MFs) with as low as Rs 500.
MFs are only for long-term: There are people who think that MF is more like PPF or NSC or other such investment schemes that require a long lock-in period. However, there are funds for almost all time duration and it ranges from a few days to several years.