MYTH & TRUTH about Mutual Funds

MYTH

1. Mutual Funds are for the experts only.
2. A Mutual Fund is an equity product.
3. Mutual Fund with Rs.10/- NAV is better than a Mutual Fund scheme having a Rs.50/- NAV.
4. Mutual Fund Investing require DEMAT A/c.

TRUTH
1. Mutual Fund investing not require expertise because you don't have to take the call on when to buy or sell shares. The fund manager will do it for you. It is his job to track various sectors and companies, and decide where to put the money you and other investors have given him.
2. When people think of funds, they think of only Equity Funds, but the truth is that a Mutual Fund is a vehicle that can carry any passenger.Equity Mutual Funds will buy shares off the stock markets and Debt Mutual Funds will buy into debt product like government bond, corporate debentures and treasury bills. The risk of each kind of fund will depend on the passenger carried by the bus.
3. Investing in funds Rs.10/- NAV or Rs.50/- NAV nothing matter on funds performance. The fact is that it is the percentage return on invested funds that matters, remains unnoticed and overlooked. For example, given a similar performance level of 10% appreciation , a Rs.10/- NAV will rise to Rs.11/- whereas a Rs.50/- NAV will rise to Rs.55/-. It's a simple truth that is neither told nor heard. In fact due to already demonstrated peformance , the chance of the Rs.50/- scheme posting the 10% appreciation is far higher than the one which has just started its innings.
4. Mutual Funds can be bought either online, either directly through AMC or through a broker; however, one can also invest offline by filling a physical form.