Active Stocks
Mon Apr 15 2024 15:59:36
  1. Tata Steel share price
  2. 160.90 -1.59%
  1. ITC share price
  2. 425.90 -0.98%
  1. State Bank Of India share price
  2. 757.75 -1.17%
  1. ICICI Bank share price
  2. 1,078.80 -2.30%
  1. NTPC share price
  2. 361.35 -0.08%
Business News/ Mutual Funds / News/  Three Mutual Fund myths one should ignore
BackBack

Three Mutual Fund myths one should ignore

Due to several misleading assumptions regarding Mutual Funds, many investors stay away from them.

Due to certain myths, investors stay away from them Premium
Due to certain myths, investors stay away from them 

Investing through Mutual Funds in the right manner can help you accumulate significant wealth in the long term. But due to several misleading thoughts and assumptions regarding the same, many investors stay away from them.  Here they are: 

Myth 1: Mutual funds are difficult to sell

Contrary to this belief, mutual funds are highly liquid. Its units can be redeemed at any time and the money will be deposited in the designated bank account in two or three business days.

Myth 2: Mutual funds are all about equities

This is a complete misconception. Apart from equity mutual funds, there are other fund categories too. Like the debt mutual funds. The difference between the two, i.e. equity and debt, is when you invest in equity mutual funds you buy the share of a company, and when you invest in debt funds, you lend money to the company.

Then there is the third category which is the hybrid funds. It contains both equity funds and debt funds. Their allocations are decided as per the market movements. Apart from these three, there are fund categories that invest in commodities too.

Myth 3: Mutual funds with lower NAV are bad funds

The Net Asset Value or the NAV has nothing to do with the quality of funds. It is simply the value per unit of mutual funds. That means, if the NAV of the fund is low, then you can buy more units of the mutual fund. And, when the NAV of the mutual fund will go your investment value will also go up.

Let’s suppose, you want to invest 50,000 in a mutual fund. Now, say the NAV of each unit of the mutual fund is currently 50, then you would be able to buy 10,000 units of the mutual fund. Now, next year, i.e. Year 2, let’s assume, the NAV per unit of the mutual fund increases to 60, then your investment value would be 60,000.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Mutual Fund news and updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 15 Oct 2021, 08:28 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App