Mutual Fund Myth Busters you need to be aware of
The modern-age dynamic investor today faces a bitter-sweet dilemma when it comes to choosing the right investing options. There are various investment avenues available for investors such as equity, debt, fixed income instruments, bank fixed deposit, government securities, etc.
And the best part is; all of these instruments are offered in one place i.e., Mutual Fund.
Mutual fund offers various types of investment instruments through their schemes. However, there are some myths about mutual funds which the Association of Mutual Fund of India (AMFI) have busted. So, let’s have a look at the same.
Myth: Mutual Fund Investments are only for the Long-term
Fact: This is not true. An individual can invest in a mutual fund for the long and short term. Mutual fund offers various type of schemes which are for a shorter time to fulfil important commitments of the investor. There are various schemes in which you can invest for just 90 days. Schemes such as Ultra-short-term funds, short-duration funds offer maturity period within one year period. One of the schemes offered is the overnight fund. Investment in this fund has a maturity period of one day.
Myth: Mutual Funds is for Experts
Fact: Mutual fund’s main objective is to serve common investors who don’t have adequate knowledge. Mutual funds are managed by professional fund managers who are well equipped to manage the investor funds. It is an inexpensive way for individuals to get a full-time professional fund manager to manage their money.
Myth: Investing in Mutual Funds is the same as investing in Stock market
Fact: Mutual funds invest in equity and equity-related instruments but mutual funds do not solely invest in equity. A mutual fund is a combination of investments. They invest in both equity and debt offering diversification to their investors. Every type of investor can invest in these funds such as conservative investors can invest in debt funds, aggressive investors can invest in equity funds and investors who are moderate risk takers can invest in hybrid funds (which are a blend of both equity as well as debt). Mutual funds offer retail investors to participate in investing in money market instruments, treasury bills, etc.
Myth: One needs large amount of money to invest in Mutual Fund.
Fact: It's absolutely incorrect. One can invest his/her funds via SIP or lumpsum. One can invest as low as Rs 500 via SIP and Rs 5000 via lumpsum. Along with this SIP offers investors the benefit of rupee cost averaging. There is no upper limit on the amount of investment one can do.
Myth: One needs to have Demat (Dematerialized) Account to invest in Mutual Fund.
Fact: One can invest in a mutual fund even if he does not possess any Demat account. Any individual willing to invest in mutual funds only needs to have KYC verification and needs to visit the site of the particular fund house. However, ETFs needs a Demat account, without having the same you cannot invest in ETF.