Five mutual funds myths busted
1. Need a large sum of money to start investing
Investors can begin their investing journey in a mutual fund with as low as Rs 500 in case of SIPs (systematic investment plans)
2. Mutual Funds only invest in Equity Markets
As per Investors risk appetite, Investors can choose to invest in variety of Mutual Funds which has the flexibility to invest across Equities, Debt, Gold, commodities etc. as per the investment objectives of the fund
3. Young people should not invest in Mutual funds
Benefit of compounding increases the earlier you start investing. Hence, Investors should start early to get the maximum benefit of compounding to create wealth over long periods
4. One needs to invest in various mutual fund to get diversification benefit
Mutual Funds itself invests across different asset class/sectors which provides the benefit of diversification. Hence one should not invest in too many funds and overdiversify.
5. There is no need to track your mutual fund investments
Like all investments, mutual funds must be monitored for deviation from the investment objective or simply for trimming / adding equities during a market upturn / downturn for asset allocation purposes.
Mutual funds offer a simple and convenient way to build long-term wealth. You can get more out of them by sticking to the basic, common-sense principles of investing and ignoring the myths highlighted over here.