Bursting Basic Myths With Mutual Fund Advisor in Chennai

When it comes to investing, mutual funds have become one of the most popular options for both new and experienced investors. However, many misconceptions often prevent people from making informed decisions. That's when a mutual fund advisor in Chennai, such as Fairmoves, can help you thoroughly educate yourself about mutual funds and their misconceptions. In this blog, we will bust some common myths about mutual funds and help you understand why they can be a great investment option.

Myth 1: You Need a Lot of Money to Invest in Mutual Funds

Fact: This is one of the biggest myths that discourage potential investors. Mutual funds allow investments as low as Rs. 500 per month, and the new schemes introduced by AMFI & SEBI also allow starting a micro SIP with Rs. 250 through SIP (Systematic Investment Plan). You don’t need a huge lump sum amount to start investing. Small investments, over time, can lead to significant returns.

Myth 2: Mutual Funds Are Too Risky

Fact: All investments carry some level of risk, but mutual funds are designed to spread risk by diversifying investments across various assets. There are different types of mutual funds, including low-risk options like debt funds. A professional can help you choose the right fund based on your risk tolerance.

Myth 3: You Need a Demat Account to Invest in Mutual Funds

Fact: Unlike stocks, you don’t need a Demat account to invest in mutual funds. You can invest directly through fund houses or with a mutual fund investment planner in Chennai. They can help you invest in the mutual funds of your choice.

Myth 4: Mutual Funds Guarantee High Returns

Fact: While mutual funds have the potential to offer good returns over the long term, they do not guarantee profits. Market conditions affect performance, and returns may vary.

Myth 5: You Cannot Withdraw Your Money Anytime

Fact: Open-ended mutual funds allow investors to withdraw money whenever they want. However, some funds, like tax-saving ELSS funds, have a lock-in period of three years.

Myth 6: Mutual Funds Are Only for Long-Term Investment

Fact: Long-term investing often yields higher potential returns due to compounding. However, mutual funds also offer short-term options like liquid and debt funds for investors with different financial goals.

Myth 7: SIPs Are Only for Equity Mutual Funds

Fact: SIPs can be used to invest in various types of mutual funds, including equity, debt, and hybrid funds. They provide the advantage of rupee cost averaging and help reduce the impact of market fluctuations.

Myth 8: Debt Funds Are Always Safer Than Equity Funds

Fact: While debt funds are generally less volatile than equity funds, they are not risk-free. Interest rate fluctuations and credit risks can impact returns.

Myth 9: KYC (Know Your Customer) is a Repeated Process

Fact: KYC is a one-time process. Once done, you can invest in multiple mutual funds without needing to complete the process again.

Myth 10: Mutual Funds Are Only for Experienced Investors

Fact: Mutual funds are designed for everyone, including beginners. With expert fund management, even first-time investors can benefit from professional investment strategies.

Conclusion:

Mutual funds are an excellent investment option when chosen wisely. By debunking these myths, we hope to encourage more investors to make informed decisions. With the right decisions, you can take advantage of this flexible and accessible investment option. Start investing today and take the first step towards financial growth!