One of the greatest wealth creations and
which are highly famous among the investors are Mutual Funds. But there are ‘n'
numbers of misunderstandings about this instrument. Here we are listing down
some of the myths regarding mutual funds and try to clear out that and try to
understand mutual funds better.
Ø
Investing
needs to be done at large- There is a common myth among investors that they
need to invest a large amount of sum to fetch out the substantial return. But
that's not partially correct. You can even invest Rs 500 every month through
SIPs. Further you can always scale it up and even a contribution of Rs 2000 can
give you back the return of good amount.
Ø
Schemes
with greater ratings give you better earning- Ratings of any agency can
only give you the idea about its past performance but it can never predict its
future. The ratings of the scheme keep changing according to its performance.
It is advised to take the ratings as guidelines rather than the deciding factor
for the fund purchase.
Ø
Demat
A/C- It is advised to have a Demat a/c but that's not mandatory. The
investment in the mutual fund can be done without a Demat a/c through
distributors. The online distributors have their own fund houses and their
individual online platforms where funds can be bought and redeemed.
Ø
Low NAV
funds are better- You should never ignore a fund because it has a high NAV.
You must have a look at all factors before purchasing it.
Ø
Returns
are guaranteed- These mutual funds are connected or linked with a market.
Being subjected to the volatility of the market, mutual funds come out with the
risk of losses. The returns of the underlying assets which range from high-risk
equity to no risk government securities.
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