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Mutual Fund Myths Busted

While we know that Mutual Fund is the most diversified, liquid and professionally managed financial investment option, there are still some myths around it that generates doubt and holds us back from investing.

It’s okay to have doubts, but if they are refraining you from making the right decision, it’s time to understand Mutual Funds in a better way and break the myth that surrounds it. 

M U T U A L F U N D

So let’s have a look at the 6 common myths around Mutual Funds and bust them one by one. 

  1. You need to have a Demat account to invest in mutual funds: You do not require a demat account to buy Mutual Funds. You can either go and visit the Asset Management Companies (AMC) websites or buy it directly through online distributors it’s as simple as that. 
  2. You need a lot of money to invest in mutual funds: All that you need to start investing in Mutual Funds is an amount as less as ₹100 in SIP and ₹5000 if you want to invest in lump sum. You don’t have to be rich to invest in Mutual Funds. With easy SIP methods you can start investing from your pocket money while you are in your college. 
  3. Mutual funds are long term investments: Though we know that the longer we stay invested the more we can earn and gain from the markets, but it does not mean that Mutual Funds only are for long term only. You can invest for a short, medium or long term depending upon your requirements and your investment ability. 
  4. You need to be an expert to invest in mutual funds: Yes you need some understanding of investments and various investing options but it does not mean you need to be an expert to invest in the Mutual Fund though some knowledge is always to your advantage. The best part about Mutual Fund is that you have a professional Fund Manager who is managing your money for you. You just need to select the funds that you want to invest in depending upon your risk appetite and your tenure and the rest of the work is taken care by the Fund Manager. 
  5. Only top rated mutual funds ensure good returns: Though top rated funds are a good step too short list schemes to invest in, it does not mean that it’s the only way to select a Mutual Fund to invest in. The performance of a Mutual Fund depends on many factors like who is the Fund Manager, what is its Expense Ratio, what is the Asset Under Management (AUM) and the Sharpe Ratio. These factors can change anytime due to varied reasons and impact the performance of Mutual Funds positively or negatively, so you need to choose wisely and not just follow the heard.
  6. Mutual funds ensure guaranteed returns: While Mutual Funds have the capability to generate good returns, they are still a market linked instruments and like any other investment options, Mutual Funds also come with their own risks. Since Mutual Funds are market linked specially the equity funds, their performance highly depends on the performance of the stock market which can move in any direction up or down. 

Mutual Fund Myths Busted

Now that we have understood Mutual Funds, it’s time for us to start investing in them without much apprehension. You can read my blog Planning to invest in Mutual Funds? Here is how you can pick the right one- Be a wise investor which throws light on various parameters of choosing the right Mutual Fund to invest in. 

Disclaimer: Mutual Fund investment is subject to market risk. This blog is to inform its readers and by no means indicates that Mutual Funds are risk free. Invest wisely. 

42 replies on “Mutual Fund Myths Busted”

Whenever I read about mutual funds, it reminds me of my summer training days during MBA. We learned , read so much about Mutual Funds. Your post is very clear and you have explained everything in an easy language.

Thank you for sharing your opinion on this important topic in easy language. U cleared my all doubts. Looking for something like this and u solved my problem.

Yes mutual funds are most common investing option and many people did not understand all important aspects. you have explained all things so well in this post, will help a lot of people to avoid mistakes and make correct choices for themselves.

This was indeed an informative blog. I have been meaning to read more on this topic and this blog has clarified a lot of topics for me. Mutual funds are indeed a wonderful option of investment..

I am so happy that you have shared such an informative post, Mutual funds are so important and there are so many people who are not aware of the benefits and your post will surely help them.

Mutual Funds are a great way to get into stock trading without expert knowledge of the financial markets. The best thing about Mutual funds is that one can be flexible with the investment amount, and the money is managed by professionals with access to research and analysis.

Mutual funds are indeed one of the subjects that need thorough understanding but most people have doubts and this post is a ready reckoner in helping clear those myths and doubts surrounding it. This is yet another very helpful post of yours related to finances.

Oh wow! You’ve certainly busted quite a few myths I had about Mutual Funds. For example, I was so sure that I need a Demat account to buy mutual funds. Very helpful post!

A nice informative post on various myths surrounding Mutual Funds. Being an ex Banker, I can easily relate to your post. Invest little by little, regularly, and in most of the cases watch your investments giving you great returns, both long run and short or medium term. That’s the beauty of mutual funds,particularly SIPs.

truly these are great mutual fund myths that you have tried to break with this post. In fact many women whom I meet and I have a conversation around this topic tell that demat account is necessary for investing in Mutual Fund.

A mutual fund is one of the best investments we can do. Two years back I realized this and invested in it. You have shared the myths in a very easy way that now everyone will have a clear version about Mutual Fund

Mutual fun investment if done for a long term it is immensely beneficial and I think it is relatively safer compare to investment in stocks. I am a demat holder and all my investments aee for long term.

Hansa, thanks for busting a lot of mutual funds related myths. Personally I have been extremely reluctant to invest in mutual funds due to the risks involved. But I will try to take a deep dive, thanks to your wonderful post.

No matter what our plan of investment is, we should be absolutely sure of it. Mutual funds are the easiest way of investment.

My dad used to invest in mutual funds when people didn’t even know about it. I have been investing in mutual funds since last 8 years. And I feel weird that people still think that it ain’t worth it. Your post is really valuable and it points out the truth.

Good u posted the myths because I know a lot people have doubts over MF including myself.

I had read your other article and it was indeed helpful. This too busted some common myths and now am convinced to invest in MF.

I will share these things with my family & friends too.

Thanks for this post. I have struggled to understand mutual funds as most of the times when I am suggested to invest in mutual funds by the banks have always been for a large amount. That has definitely put me off of committing for that huge amount for a long time. But this post shows I can explore the smaller amounts.

It is always good to have some knowledge before investing your money. Your post is very clear and you explained mutual fund benefits and risks in a very easy laguage.

Right on time I am reading this blog when me and my sister was planning to take some mutual funds to invest our hard earned money 😅 was confused about some myths, thanks for sharing 👍

Investing in Mutual Funds are indeed simple..But many don’t still understand how to go about it. Reading this post will help them gain some clarity and take the first step in the investment lane.

Mutual funds are best way to invest but proper and deep research is vital before we go and invest in mutual fund. Good information.

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