MYTHS ABOUT MUTUAL FUND

Hello Friends, 

My this blog is related to tell you about some common Myths about Mutual Fund in the mind of Investors. I will try to resolve this.

So let's start it:

• Only Experts can make investment in Mutual Funds. 

Fact: Mutual Funds are meant for common investors who may lack of knowledge or skill set to invest in the securities market. It is professionally managed by expert Fund Managers after market research for the benefit of investors. Investors have an opportunity to get a full time professional fund manager who will manage their money.

• Mutual Fund Investments are only for the Long Term.

Fact: Mutual Funds can be for the short term or long term as per one's investment and objective. There are various scheme where you can invest for a few days or few weeks or for few years. 

• Demat Account is must for Mutual Fund Investments.

Fact: It is optional, except in respect of Exchange Traded Funds. It is the choice of the investors to have to hold the units in Demat mode or through savings account. 

• A large amount of money is required for Mutual Fund Investments.

Fact: It is incorrect. One could start investing in mutual funds with just Rs.100 per month via SIP (Systematic Investment Plan) and with just Rs. 1000 for a  for a lump sum/one time investment. Earlier it was Rs. 500 p.m via SIP and Rs. 5000 as lump sum.

• Mutual Fund Investment is same as Investment in the Stock Market.

Fact: Not exactly. In the Mutual Fund one has a choice to choose the fund as per choice like Equity Fund, Balanced fund and Bond fund. As compare to Balanced fund and Bond fund, large portion of money will be invested in the stock market through Equity fund.

• Mutual Fund Investments in NFO (New Fund Offer) is better than existing Mutual Funds. (New scheme is better than old scheme). 

Fact: This is not correct. NAV (Net Asset Value) represents the market value not the market price. Any increase in the fund will depend on the price of the Mutual Fund. Let's take an example: Suppose you want to invest Rs. 10000 in Scheme A (NFO) with a NAV of Rs. 10 then you will get 1000 units and in Scheme B with a NAV of Rs. 25 then you will get 400 units and with the 25% increase in both  the schemes you will get Rs. 12500 in both the schemes whether it will be new scheme or existing scheme.

• Mutual Fund scheme with a higher NAV has reached on its peak and it can't grow. 

Fact: It is totally wrong. Performance of a Mutual Fund will depend on the performance of the companies and if you study properly before investing or consult with your fund manager. He will guide you. If the companies are growing from past years then you can check the companies' future goals to continue with the same fund. It doesn't mean that a higher NAV means Peak Value of the fund.

I hope it will be helpful to you.

Thanks and Regards

Kulvinder Kaur

B.Com(H), MBA(Finance)

9871580806,8826566751

rightsteptoinvest@gmail.com