Home : About us : Blog

Mutual Funds - Myths Busted

Myths Busted

Myths can lead you to erroneous conclusions. Your investments are no different. There are myths around mutual fund investment that need to be busted to have a fruitful investment experience.

Here’s busting a few popular mutual fund myths:

Myth 1: Mutual Funds are only for long-term investing

Fact:

You can do goal-based investing in mutual funds. Your goal tenure can be short-term, medium-term or long-term. Mutual funds have different schemes around various investment objectives and horizons. You can also invest in mutual funds for ultra-short goals (ultra-short debt funds) or emergency corpus creation (liquid funds).

Myth 2: Mutual funds are for experts

Fact:

Mutual funds are professionally managed. The fund manager conducts advanced market research and makes necessary decisions related to the investments in the fund. Therefore, you need not be a market expert in investing in mutual funds.

Myth 3: Investing in mutual funds is the same as investing in stocks

Fact:

Mutual funds invest in equities and debt, fixed income, gold, and money market instruments. You can invest in any of these assets or a combination of them through mutual funds, based on your goals, tenure and risk appetite.

Myth 4: Mutual funds with a lower NAV are better

Fact:

The NAV or Net Asset Value of a mutual fund is the total market value of its underlying assets rather than its market price. In simple terms, the difference in a fund’s NAV between the two dates would indicate how that fund has performed during that period. Comparing the NAV itself to that of other funds might not be helpful. Therefore, considering the NAV comparison of mutual funds can be irrelevant while choosing a mutual fund.

Myth 5: You need a large amount of money to invest in mutual funds

Fact:

Your single mutual fund SIP (Systematic Investment Plan) investment can be as low as ₹500. Another striking feature of mutual funds investing is snackable and regular investing. Therefore, you can start with just a SIP of ₹500 or a lump sum of ₹5000 (₹1000 subsequent lump sum additions) with no upper limit.

Myth 6: You need a Demat account for mutual fund investing

Fact:

You only need a Demat account for investing in an ETF (Exchange-Traded Fund). You may also need it if you want to hold any mutual fund in Demat mode. You do not need a Demat account for investing in mutual funds otherwise.

Myth 7: Mutual funds give guaranteed returns

Fact:

Returns in mutual funds are subject to their asset and risk profile. Mutual funds being a basket of assets whose returns are linked to the price of the underlying assets and may vary from time to time. Therefore, mutual funds cannot give guaranteed returns.

Myth 8: You should select a scheme with the best past performance

Fact:

You should not consider past performance only as a parameter for future performance. This is because the markets and economic conditions keep changing. Therefore, it is better to look at the reasons for the fund’s performance, its underlying assets and the fund manager’s experience before investing.

Steering clear of mutual fund myths is necessary for making informed investment decisions. Now that we have busted some myths, you can start your investment journey with mutual funds with realistic financial goal roadmaps.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

chatbot icon
Declaration

The information and data contained in this Website do not constitute distribution, an offer to buy or sell or solicitation of an offer to buy or sell any Schemes/Units of Tata Mutual Fund, securities or financial instruments in any jurisdiction in which such distribution, sale or offer is not authorised. The material/information provided in this Website is for the limited purposes of information only for the investors. In particular, the information herein is not for distribution and does not constitute an offer to buy or sell or solicitation of an offer to buy or sell any Schemes/Units of Tata Mutual Fund, securities or financial instruments to any person in the United States of America ('US')/Canada.

Currently, the funds of TATA Mutual Fund have not been registered under the United States Securities Act of 1933 (the 'Securities Act') or under the securities laws of any state and the funds have not been registered under the Investment Company Act of 1940 (the 'Investment Company Act') of the United States. Units in the funds are therefore not being offered or sold within the United States/ Canada or to United States/ Canadian Persons.

By entering this Website or accessing any data contained in this Website, I/We hereby confirm that I/We am/are not a U.S. person, within the definition of the term 'US Person' under the US Securities laws/resident of Canada. I/We hereby confirm that I/We are not giving a false confirmation and/or disguising my/our country of residence. I/We confirm that Tata Mutual Fund/Tata Asset Management Limited (TATA AMC) is relying upon this confirmation and in no event shall the directors, officers, employees, trustees, agents of TATA AMC associate/group companies be liable for any direct, indirect, incidental or consequential damages arising out of false confirmation provided.