5 Myths about Best Mutual Fund Investment Plan Busted

Mutual funds are a collective scheme that pools money from a group of investors. The pooled money is managed by an investment manager who invests it in diversified schemes to achieve the investors' desired goals.Investment in a mutual fund is subject to market risks, but this doesn't mean it is not suitable for you. If you're investing in mutual funds, you have heard about such myths surrounding it. It is risky, but that depends on an investor's tolerance level.

1. Myth: Only experts should invest in mutual funds Fact: Even if you have no idea about any mutual fund scheme, you can still invest in it with the help of investment professionals. When experts manage your investments, you don't have to worry about picking a fund or buying or selling the units. The fund manager takes care of investment decisions.
2. Myth: SIPs are best suitable for Equity Mutual Funds Fact: Irrespective of fund type, you can invest in mutual funds through a Systematic Investment Plan (SIP) . You can initiate a SIP for debt, equity, or hybrid mutual funds.
3. Myth: You require a large amount to invest Fact: There is a lot of misconception concerning the quantum of investment. You do not need to have a large sum of money to start investing. You can choose the best mutual fund investment plan and begin investing as little as Rs.500 monthly through SIP, and gradually you can increase the investment amount.
4. Myth: SIP means guaranteed returns Fact: Most people are less informed when it comes to SIP investment. Many believe that investing through SIPs will help them eliminate loss and earn guaranteed returns. The fact is SIP only helps to average out investment costs, reduce risks, and other related losses.
5. Lumpsum and SIP mutual funds are different Fact: There is no difference in the types of mutual funds. Lumpsum and SIP are the modes of payments. Investors who have surplus cash or can afford a one-time investment can invest in high-risk fund units. In case you're looking for a cost-effective investment option you can choose SIP mode and invest in equity, debt, or hybrid funds.

With the growing inflation rate, savings may become insufficient in securing your future. You need to start investing in a mutual fund that helps you beat inflation and realize your dreams in no time. If you're keen on investing in mutual funds, you first need to clarify the misconceptions to start afresh.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.