5 Mutual Fund Myths That Cost Indians Money
These misconceptions have kept crores of Indians from building wealth. Let's bust them.
"Mutual Funds Are Risky"
This is the biggest myth. People park lakhs in FDs earning 6% (which becomes 4% after tax and inflation), thinking it's "safe."
✓ REALITY
Mutual funds come in many types. Debt funds are as safe as FDs. Liquid funds are safer than savings accounts. Even equity funds—while volatile short-term—have never given negative returns over any 10-year period in India.
"I Need a Lump Sum to Start"
"I'll start investing when I have ₹1 lakh saved." Meanwhile, years pass and that ₹1 lakh never materializes.
✓ REALITY
You can start a SIP with just ₹500/month. Many funds accept ₹100/month. The key is to start—not to start big. ₹500/month at 12% for 30 years = ₹17.6 lakhs.
"I Need to Time the Market"
"Market is at all-time high, I'll wait for a crash." Spoiler: The market spends most of its time near all-time highs. That's how growth works.
✓ REALITY
Time IN the market beats timING the market. SIP automatically handles this—you buy more units when prices are low, fewer when high (rupee cost averaging). Even professionals can't consistently time the market.
"NAV is Too High—Fund is Expensive"
People prefer funds with ₹15 NAV over funds with ₹500 NAV, thinking they're getting a "cheaper" deal.
✓ REALITY
NAV is just price per unit. If you invest ₹10,000, you get 666 units at ₹15 NAV or 20 units at ₹500 NAV. If both funds grow 10%, your ₹10,000 becomes ₹11,000 in BOTH cases. NAV doesn't matter—only returns do.
"Past Returns Guarantee Future Returns"
Chasing last year's top performer is the most common mistake. That fund may have just had a lucky sector bet.
✓ REALITY
Look at consistency over 5-7 years, not 1-year returns. Check if the fund beats its benchmark. See the fund manager's track record. A fund that's consistently in top 25% is better than one that alternates between top 10% and bottom 30%.
The Bottom Line
Mutual funds are one of the best wealth creation tools available to retail investors. They offer professional management, diversification, and liquidity—all starting from ₹500. The only real risk is not investing at all.