Mutual fund has become one of the most trustworthy and relevant investment now. Many investors invest their money in mutual funds by doing SIPs. But there are many misconceptions about mutual funds which need to address and to bust. These myths stop small investor to invest in mutual fund. So they can’t decide that should they invest in SIPs or not!!
Mutual Funds Are For Wealthier People:-
I can make a bet that you have heard this myths several times, but it is not true. It is good to invest more money to get more returns, but it is not necessary that you need so much money to invest. You can start your investment journey in Mutual funds by doing SIPs. You can start your SIP at Rs.1000/- per month. By doing so you can invest a very small amount of your income. As your income grows up you can increase amount of your monthly SIP.
Investing in SIPs:-
If you ask many investors where they are investing. They would give an answer you that they are investing in SIPs. But is not true. SIP is not an investment. But it is a method. By doing SIPs you can invest in Mutual funds. Even you are not doing investments in mutual funds but you are investing in securities through mutual funds. Basically mutual fund means that you can invest in various stocks via mutual fund with the help of fund managers.
Mutual Funds Are Not Safe:-
It is very common myth that mutual funds don’t have any rules and regulations. Due to lack of knowledge, many investors think that it is not safe to invest in mutual funds. But it is not true. Mutual funds are being highly regulated by SEBI (Securities and Exchange Board of India). SEBI has made so many rules and regulation to protect the rights of investors. So it is so safe to invest in mutual funds. It is one of the best investments options.
You have to be an expert to invest in SIPs:-
Many investors think that SIPs are for expert people, so they can’t invest in SIPs. But it is not true. Fund managers are the Experts who handle your SIPs money, with their knowledge. So many retail investors like you and me, who want to invest in stock market but can’t do because of lack of time and knowledge also can invests through SIP route.
You Should Stop Your SIP In Bear Markets:-
Some investors in order to be smart, they stop their SIPs in bear market. But it is one of the best times to invest in mutual funds. Let me explain you with an example. If you are doing an SIP of 15000 per month, and the price of a unit is 100. Then you would get 150 units. But when market goes down in bear run. The price of the stocks would fall down. So eventually the price of a unit goes down. Then you would get more units in the same price. If we continue the above example, the price of a unit is 75. Then you would get 200 units. When market goes up again. You would get more returns.
Mutual Funds Are Same As Equity:-
Many investors think that mutual funds are same as direct equity, but it is not true. There are so many types of mutual funds in market. They are invested in various types, various sectors and various companies with various rates of return. There are many mutual funds, which would be invested in equity in order to achieve high returns. But there are many investors who prefer safety over high returns. So fund manager invests in bonds, gold or government securities. If you want to achieve good returns with low risks, then there are some mutual funds called hybrid fund where fund manager invests in both equity and debt.
There are so many myths about mutual funds and SIPs in the market. But we have addressed some them which are most popular among all of them. We should not forget that you can’t achieve anything without making sacrifices. Every investment has its own risks. Like what if banks ran out of their money?? You would lose your money. So basically you can’t get good return without taking risks, but mutual fund provides you high return with low risks.