First time investors are always in a dilemma at the start and without initial guidance and proper knowledge they are bound to fail. In investment knowledge is the most important thing and you cannot be ignorant about your investment choices. Mutual funds are something that are enjoying great interest from a big community of investors. No doubt mutual funds are a great option for investment but without complete knowledge you may stumble and fall right in the beginning. Here in this blog we talk about 5 myths about mutual funds that confuse first time investors:
1. Mutual Funds Refers to Investing in Stock Market
Half truth is more dangerous than a lie and this myth is one among them. When the name mutual fund comes, people usually think that it is related to stock market, but it is half true. Yes, mutual funds means investing in stock market, but those mutual funds have a specific name – EQUITY MUTUAL FUNDS. People normally think that being related to stock market, mutual funds are very risky for investment and this stops them from making an investment. Apart from equity mutual funds there are debt mutual funds and liquid mutual funds that deal in bonds, government securities etc.
2. Investment in Mutual Funds needs a lot of Money
Many first time small investors think that mutual funds is not their cup of tea as they have usually seen big investors dealing in mutual funds and also there are some wrong notions some lesser educated people have spread among the masses. No, mutual funds are not necessarily meant for people who wish to invest a large sum of money. Anybody can start investing in mutual funds and that too with a sum of as less as 1000 rupees.
3. Mutual funds are an investment for a long term
This is another very big misconception that people have about mutual funds. Coming to the truth, mutual funds are not necessarily meant to be a long term investment. There are different kinds of mutual funds that are meant for short period of time such as short term debt funds and liquid mutual funds. These mutual funds span for periods as small as 6 months to 2 years. This indeed clears a lot about the misconception that people have about the period of investment in mutual funds.
4. SIP can be done only on a Monthly basis
This is again a very stupid assumption that people have about mutual funds. No, Systematic Investment Plan is not just a monthly basis investment; in fact you can even invest on quarterly or weekly basis as well. All in all SIP is not just meant to be a monthly investment, you can decide upon the time according to your suitability.
5. Mutual Funds Always Promise Guaranteed Returns
This is also one of the common notions that people hold about investing in mutual funds, but what they fail to learn is that this is not always true. The investment market is full of uncertainties and in some rare cases you may also face losses.
So these were 5 myths about mutual funds that often confuse first time investors. If you are looking for a safe and better online platform for investment in mutual funds ZIPPER trade would be just the right choice. The online trading platform provides dedicated services in the domain of mutual funds.
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