10 Myths About Mutual Fund Investing in 2022

10 Myths About Mutual Fund Investing: Mutual fund is a good medium to make capital for a longer period. Despite the regular advertisements of the Association of Mutual Funds in India (AMFI), people still have many misconceptions about investing in mutual funds, which we will try to clear today.

If you want to invest in mutual funds, then Upstox is the best app platform. For Mutual Fund, PAN card, Aadhar card, own bank account, etc. is required. This information is very important in capital investment. According to the guidelines of RBI, the person should have PAN card, Aadhar card and bank account. Download Upstox App now and create an account for Mutual Funds.

Create an account at UPSTOX and get current offers up to Rs.1000. The account will also be created for free now. In this, you can see the complete guide to opening a demat account here and also with the present free offer, the brokerage up to Rs.1000 will also be free.

If you stay with us till the last, then all your misunderstandings will be cleared. We will thoroughly discuss 10 common myths about mutual fund investing.

10 Myths About Mutual Fund Investing

Myth 1: You Need a Lot of Money to Start Investing in Mutual Funds

Fact :- Mutual Funds are a good investment tool for everyone, whether you can be a good money earner or you have just started earning, or you want to invest your minimum savings. You can also invest less than Rs 500 in Mutual Funds. You can also start a Systematic Investment Plan (SIP) with equal monthly investment. Investing regularly in mutual funds can help you pool your money and build a sizable capital corpus.

Listen less to people and think more yourself and know the truth. You can also choose Rs 100, 200 or Rs 500 per month. The minimum SIP of all companies is different. You can invest/invest in any company as per your choice. You can invest here together or occasionally. Whenever you feel that there is money left, you do not want to spend, then invest in mutual funds.

Myth 2: Mutual Funds are Risky. Is investing in Mutual Funds Risky?

Truth: – Many people are afraid of investing in mutual funds because they consider it risky, but it is not so. They always invest in stocks, bonds, gold depending on their investment, so that your money is divided into different parts and invested. If there is a loss from any area, then there is a good gain from some area. In this way you get a good return.

Many companies put all the money of their equity fund (which we invest) in different stocks, these are the stocks whose risk factor is only nominal. Still if any stock is loss then other stock is good We give the return and we get it. All this is done by experienced market experts with thorough research. From now onwards, never rates on mutual funds. Whenever you invest, invest in mutual funds without any stress

Myth 3: SIP Eliminates all Risk

Fact :- Investing in SIP/SIP is not only convenient, but it also gives average returns over a given period. If you are investing in an equity scheme through SIP, you can get good risk-adjusted returns in the long run, which are much better than always keeping the money in the bank i.e. bank interest. Instead of 3 to 4 times benefit.

If you exit in a down cycle i.e. withdraw money in a short period of time, then SIP does not completely eliminate the risk of diminishing returns, as the market average needs enough time. However, if you stay invested for a long period and the market goes up, you make money. If you withdraw money when the market is down, then you are not able to make good profits. It is best to invest long term in mutual funds.

Myth 4: Understanding the Stock Market is Essential for Mutual Fund Investment

Truth: – Whatever money we invest in mutual funds is invested in gold, shares and bonds, this is true but it is important to know whether you should have knowledge of share market to invest in mutual funds. The answer is, absolutely no, you do not have to know how to choose a stock, how the market works, when the stock market will give loss or profit. All this work is done by the mutual fund itself. Mutual funds are made for such people who do not have knowledge of the market or do not have time to understand the market, or they do not want any kind of stress.

Myth 5: Mutual Funds Guarantee Returns

Fact:- Mutual fund schemes invest in stocks, bonds or gold depending on the investment objective of a scheme. How a scheme will perform, it depends on how the portfolio of the scheme (ie, where and where the money is invested) performs. Returns are not guaranteed, but over the long term, it is imperative for the fund manager to make money for you. In the long run, almost all the schemes perform well and get good returns from the patient investors.

Also Read: How to Earn Money From CoinSwitch App in 2022?

Myth 6: Mutual Funds Cannot be Multi-Baggers

Truth: – Many people believe that mutual funds can never be multi-bagger i.e. they cannot invest manifold. One way to make money in the stock market is to buy shares that are multibagger – a company whose share price increases manifold.

Mutual fund schemes are considered to be very slow investments as they have a portfolio of stocks and not all the stocks held in a portfolio can be multibagger, you also know that. However, what happens in the real world is that all the stocks we pick become multibaggers.

Myth 7: NAV/NAV matters. Net Asset Value

Fact: Higher NAV/NAV is often equated to higher return potential by some investors. Although high NAV is a result of past performance built at a point in time, it cannot be any guarantee of future. As Warren Buffett once said, “Today’s investor doesn’t profit from tomorrow’s growth”.

The allocation of mutual fund units is done on the basis of realization of funds by the mutual fund house before the cut-off time. Some equity investors worry that missing a day or two could cost them. But, for long term investors, there is really no point in focusing too much on the NAV of a particular day. If you are regularly investing in equity funds for long duration, a delay of a day or so due to operational reasons does not have any major impact on your overall returns.

Myth 8: Mutual funds work only in the Long Term

Truth: It is true that mutual funds work best in the long term, but some mutual fund schemes prove to be good for short-term investors as well. Overnight funds and liquid funds are the best options to invest funds for short term.

Myth 9: Forget about investing in Mutual Funds

Truth: – Many people often leave their capital by investing in mutual fund schemes and then do not even look at their investments. He believes that over time, these investments will become a big capital. This is not a good idea. It is good to review your investments regularly. You should make some changes in the investment according to your time, keeping in view the financial situation. It is a better idea to review your invested portfolio from time to time.

Myth 10: Redeem after lock-in Period is Over

Fact: Equity Linked Savings Scheme (ELSS), also known as Tax Saving Scheme, has a lock-in period of three years. People have a habit of selling their units after the lock-in or high exit-load period of mutual funds is over. You shouldn’t do that, you can keep them. Every time you redeem, you have to pay tax. If the mutual fund scheme is performing well, then you can continue with it, it may prove to be a better idea.

FAQ Section

When should I start investing in mutual funds?

There is a great saying, “The best time to plant a tree was 20 years ago. 
The second best time is now. Then start today.

Which mutual fund is best in India?

1. ICICI Prudential Technology Fund
2. TATA Digital India Fund
3. ICICI Prudential Technology Fund
4. Aditya Birla Sun Life Digital India Fund

What are the 4 Types of Mutual Funds?

Most mutual funds fall into one of four main categories – money market funds, bond funds, stock funds and target date funds. Each type has different characteristics, risks and rewards. Money market funds carry relatively low risk.

Which is better FD or Mutual Fund?

Over the long term, mutual funds have the potential to deliver returns that beat FDs. 
Moreover, mutual funds are highly liquid and more tax efficient as compared to the benefits of FDs. 
Mutual funds make a better investment option than FDs.

Are mutual funds safe in India?

Mutual fund companies are regulated and supervised by regulatory agencies like Securities and Exchange Board of India (SEBI) and Association of Mutual Funds in India (AMFI), no fund house can abscond from investor’s money. In short, a mutual fund house is as safe as a bank.

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