Why People Hesitate to Invest in Mutual Funds

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Mutual funds are gaining popularity these days, with campaigns like "Mutual Fund Sahi Hai" becoming more and more familiar. But do you really believe in them? You might be curious about Mutual Funds and even feel a growing desire to invest, yet you also have your reasons for delaying investment in mutual funds. In this blog, let's understand the reasons and find solutions to those reasons. Let's figure out what is holding you back.

Top 10 Common Reasons for Not Investing in Mutual Fund

1. Not Have Enough Money to Start Investing

Mostly people have a myth that investing requires a large amount of money to make good wealth. However mutual funds have a SIP or systematic investment plan option to start investment with a very small amount. Through this system, we can build a habit of investing consistently over the time. This can lead to good returns in the long and helps in achieving your future financial goals like a child’s future education or self-retirement planning.

2. Don’t Trust Investing

This might be another reason because you always believe that savings on your own are way better than investing right but have you ever considered to learn about the benefits of investing? A savings account hardly gives 2-3% interest, and fixed deposits offer 6-7%. As inflation is already at 6% or more, mutual funds can easily provide 12-15% annualized returns. You can’t grow your earnings through traditional savings but if you prefer investing in mutual funds this can lead you to various investment profits.

3. Can’t Afford to Invest a Lot Each Month

Next comes the hype about a large amount of investment in mutual funds. There are two ways of investing first one is a Lump sum and a Systematic investment plan. In Lumpsum investment you can start with Rs 5000 and in SIP you can start investing with as low as Rs. 500 monthly. So choose according to your comfort level. Don’t trust blunders about mutual funds, start your investing now.

4. Fear of Risk or Losing Money

Stock market investing no doubt has risk of positive & negative returns and also sometimes has the failure of investment as well. However mutual funds are professionally driven funds where a top expert analyst team manages investment very precisely by looking at every aspect of risk

5. High Costs of Mutual Funds

The Securities and Exchange Board of India supervises mutual funds, where they make rules and make sure that everything even the mutual fund prices is open and equitable for investors. You may rest easier after knowing that your assets are in safe hands and protected by laws meant to maintain integrity since SEBI is keeping an eye on mutual funds investing.

6. Not aware of How Mutual Funds Work

The process of mutual funds remains unclear to many Indians. They are worried about losing money because they watch TV commercials that say things like, please read the offer documents carefully before investing. Mutual fund investments are subjected to market risks. Most Indians believe that putting their money in banks is safer since they come from a traditional society. However, they would be more convinced to invest, if they knew more in detail about mutual funds.

Get Expert Advice Now to know more about Mutual Funds

7. Bad Past Experiences of Investing 

Mutual funds were started in India in 1963, for over 25 years or more this mutual fund industry provided the opportunity to invest. One of the major reasons for investors negative experiences is misselling where distributors suggest funds and charge them higher rather than ones that are best for the investor's needs and goals. This conflict will break the trust of many investors.

But here are the solutions always take expert advice and trust the experienced distributors so that you can invest without fear and allowing you to invest with confidence and achieve your desired returns.

8. Prefer Safety

Mutual funds provide options that match your comfort level with risk. There are several types of schemes and safer funds are an option if you want low-risk investing. However, some funds such as the Equity Linked Savings Scheme, or ELSS offer both a secure investment choice and tax advantages. Some of the Best Scheme of ELSS funds are:

9. Need Money for Now

Though it's nice to live in the present, it is also important to plan the future. Making a small investment today might help you enjoy the benefits later on. For example, your small first investment in a mutual fund today might increase over time. In this manner, you may create a financial safety net for the future while still taking enjoyment right now.

Imagine you have a monthly salary of 30K, and you decide to invest just Rs. 1,000 each month for 7 years at a 15% return rate. By the end of that period, your total investment would be Rs. 84,000, but it would have grown to Rs. 1,48,968, giving you an estimated return of Rs. 64,968.

Now, think about what you could do with that Rs. 1,48,968 money you have earned through smart investing in mutual funds, ready to help you fulfill your desires.

Calculate Your Returns in Seconds with Our SIP Calculator

10. Prefer Buying Physical Investments like Gold  

If you’re interested in investing in gold, that's a great option. But mutual funds are another way to invest in gold. Investing in mutual funds could lead to higher profits than directly purchasing gold. However, they assist in spreading your assets, improving the range and balance of your portfolio in its entirety.

Here are the Best Gold Funds to Invest In:

In the Nutshell

Remember to gain complete knowledge about mutual funds, it's important not to believe in myths about mutual funds. You can start creating a safe financial future with mutual funds by resolving these worries and beginning with small amounts. To ensure that every investment you make is valuable, consult an expert before making any decisions.