Mutual Fund in Detail - 3

                            

In this mutual fund series you have seen the types of mutual funds available in the market and the returns it generates. Now we can see the myths surrounding the mutual fund investments. It is normal that when we go to a new place we tend to be very cautious as everything is new and try to avoid us being in unwanted circumstances. Just like clouds will not turn into rain all the time, all the myths may not be true or all are just fear and the rumors spread from one to the other.

 Investment is a big word and I can’t afford 

Investment is just as simple as putting your money into an avenue which will increase your value. Most of you would have heard that Mukesh Ambani of Reliance Industries have invested close to 4G 70,000 crore which will increase the footprint of reliance in telecom space. When you compare investments with this scale it is utter rubbish. Reliance would have funded partly from their existing cash reserves and most of the money would have come from debt rising from various investors across the world. They may be able to generate income in the immediate future for the risk they are taking at present. You don’t have a brand value and it is difficult to raise money when you are in need for your vacation, for buying home, for your retirement, for your child education and for all the unexpected reasons.  All loans will be given only when you have collateral so it will cease if you fail to pay.

So investment for you means allocating part of your income in correct avenue so that your money value increases.

No idea on Mutual fund, should I go for it?

Now if the first hiccup of allocating funds in the name of investment is decided then you need to cross the next huddle of finding the correct avenue for investment. You have seen the different types of mutual funds based on the risk taking ability in the previous topic in this series itself. In some of the cases you may be tempted to go for mutual funds and after getting details from your financial advisor you will get a fear of losing your money in the last minute.

Mutual funds are for the one who doesn’t have knowledge on share market, fund manager for that particular fund will have the headache to get the right stocks and show better performance every month. As you have somebody to choose the best options you can invest blindfolded if you have chosen the right scheme.

Do they invest only in Equities?

Many believe that MF is directly linked to share market, as we have seen earlier there are some funds which operate only in debt market. Purely depending on the risk taking ability you can choose the investment scheme and option. Enjoy the power of compounding in the long run.