Myths and Facts about Mutual Funds: It is myth that Mutual Funds are only for experts or only for long-term. It is also a myth that investing in MFs is the same as investing in stock market.
Mutual Funds Myths and Facts (Pic: X – @MFSahiHai and Pixabay)
New Delhi: The Mutual Funds industry is growing at a fast pace. Buoyed with positive movement in the stock market, the investors are pumping in loads of money in large cap funds, small cap funds, based on their preferences. The total inflow into equity mutual fund schemes via systematic investment plans or SIPs route during the fiscal year 2023-24 touched Rs 1.84 lakh crore, Association of Mutual Funds of India (AMFI) data stated. However, a large number of people are still apprehensive of investing in mutual funds owing to the market risks. In this article, News9live informs you about the myths and facts in regards to the MFs.
Mutual Funds Facts and Myths
- Mutual funds are suited for those individuals who don’t have or have less knowledge or skill to invest in the securities market. Mutual Funds are considered to be a safe bet as they are professionally managed by expert Fund Managers, who have years of experience and help the investors deposit their money in safe haven. A mutual fund scheme allows investors to get a full-time professional fund manager to manage their money without paying any huge fees.
- AMFI has stated that Mutual funds are viable for both short term or for longer term based on investor’s objective. There are different types of mutual fund schemes – equity and debt securities. Some examples of short-term MF schemes – Liquid Funds, Ultra short-Term Bond Funds, Short-Term Bond Funds and Long-Term Income Funds.
- Equity Schemes are considered to be best for a longer term, debt mutual funds are suitable for investors with short term (less than 5 years) investment horizon.
- It is a myth that investment in mutual funds is the same as investing in stock market or MF is an equity product. Mutual Funds investment in stock market (i.e., equities), bond market (corporate bonds as well as govt. bonds) and Money Market instruments such as Treasury Bills, Commercial Papers, Certificate of Deposit, Collateral Borrowing & Lending Obligation (CBLO) etc.
- It is a myth that an investor is required to have a large amount of money in Mutual Funds. Lump sum investment can start with Rs 5000 with no upper limit and Rs 1000 towards subsequent / additional subscription in most of the mutual fund schemes. Equity linked Savings Schemes (ELSS) allow investors to make a minimum investment of Rs 500. A person can start Systematic Investment Plan ( SIP) with Rs 500 per month for as long as one wishes to.
- It is not guaranteed that buying a top-rated Mutual Fund scheme will ensure better returns to the investors.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
