If youre keen on investments, you must have heard about mutual funds. If you have not yet invested in mutual funds, then it is possible that you have fallen prey to myths about mutual funds. This article will help you get clarity and make informed choices for securing a better future by busting 5 most popular myths about mutual funds.
Myth 1:Mutual Funds are only for short term.
Reality: This statement couldnt be any farther from the truth! Based on your preference you can invest in long- and short-term mutual funds. The short-term investment can be as less as 91 days. These are known as Liquid Funds. Another short-term mutual funds investment that can stretch for 1 to 3 years is the Ultra-Short Term Bond Funds. Debt mutual funds are also good if you are planning to invest for not more than 5 years.
Myth 2: Only experts should invest in mutual funds.
Reality: Mutual funds are the best place to invest if you have limited knowledge of the securities market. In fact, you can easily buy mutual funds recommended by reliable brokers like Kotak Securities. You will not have to do much less paperwork and spend little time in the process. You can buy online or simply call the broker to make a purchase. As a novice, all you need to do is determine your investment horizon and analyze your risk profile.
Myth 3: Investments can be made only in the domestic market.
Reality: Domestic markets are popular choices, but the highest performing funds are international in origin. Since 2007, the RBI has opened the gate for investing in foreign mutual funds. In fact, experts occasionally recommend international mutual funds to escape the volatile domestic economy.
Myth 4: You must invest a huge amount.
Reality: Equity-linked Savings Schemes can be purchased at an amount as low as Rs. 500. The key to successful investment in mutual funds is not how much you are investing but your goal amount. A regular investment ofRs. 2000 per month can grow to become 20 lakh in 20 years if the average annualized returns are 13%. And if can increase your investment by 10% each year, you will get 39.5 lakh at the end of 20 years.
Myth 5: Mutual Funds means investing only in equities.
Reality: There is a widely held belief that mutual funds mean investing in equity alone. However, when investing in mutual funds you can place your money in equity, debt and balanced or hybrid fund. The equity offers high returns; the debt funds offer comparatively lower returns. The hybrid funds balance risk and gain chances. Mutual funds can be tailored to suit the investors profile and have his best interest guarded.
With the growing demand for the lifestyle, you must make efforts to secure your future. Investing in mutual funds will help you realize your dreams in no time. Now that the myths are cleared, be wise and start investing.