Hello Readers!
Financial Planning, Saving Money, investing money at different places, these are the steps generally people follow, to create wealth, over a long period, to accomplish their big goals or to supplement their income with it in their retirement days.
Regarding investment, before we start it, we receive much advice, some advice is good, that makes us believe in investment even more, while some advice makes us reconsider our decision regarding investing our money. You may also get to know about many myths related to investing that restrict you from investing. To help you get started, or if you are already investing, to help you course-correct, there are three myths that need to be busted.
INVESTORS MUST HAVE LARGE AMOUNT TO START INVESTING
A big amount or large amount was required to start investing in mutual funds, but only SIP (Systematic Investment Plan) was not introduced. Now mutual fund investment offers SIP plans, that allow you to invest as little as Rs 500 per month. You can also go big SIP plans as per your goal.
BROKING ACCOUNT IS NECESSARY FOR INVESTING
Well, broking account or Demat account is a necessity, if you want to invest in Equity stocks or the stock markets, but why to have one if you have other options to participate in the growth of the Equity market? Yes, you can indirectly participate in the growth of the equity market by investing in equity mutual funds, and here the benefits are, there is no need of opening a Demat account. If you are having a savings bank account, you can start investing in mutual funds.
Mutual funds invest in a portfolio made up of bonds. This helps you get exposure to the required assets without having to go through a broker or take on the risk of short-term volatility in equity assets or the liquidity of bonds.
INVESTING IS FREE
There are some free broking accounts and the ‘no charge’ fixed deposits, where investing is free, but the case is not the same for all investing instruments. In fact, while you may be paying very little as an outright cost for a broking account, taking on the volatility risk of investing directly in equity is your true cost.
In case of mutual funds, you are charged with an annual fee, TER (Total Expense Ratio), which is charged for getting professional fund managers to manage your money and in case of the regular plan also for your advisor. The fee ranges from an average of 2.5% a year for equity funds to 1% for fixed income schemes and 0.5% for money market schemes.
Costs charged in mutual funds, often reflect the quality of the products and its capability of adding good returns to your portfolio. An investment that is free of cost may contain hidden risks or a lot of risks. Thus, be careful while evaluating an investment instrument before you invest in that, and pick out the one that suits your goal, and not the one that is free of cost.
Following myths in investing can cost you and lead to mistakes in choices of financial products. Bust the myths in investing and follow the facts and figures, analyze the past performances, analyze the cost-related, and then start investing. You can start with small; you can start investing from your bank account, you can analyze the transparency in the cost, now there is no reason to keep your away from investing. Invest in mutual funds and build a corpus to achieve your goals.
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).