Clear your doubts on Mutual Funds

HELLO FRIENDS

Mutual funds have come a long way in India. From being a single player industry for almost 23 years, it has 32 players today. Investors have a wide variety of schemes as well as fund houses to choose from.

In fact, it will not be wrong to say that mutual funds are fast emerging as an ideal investment option for investors with different risk profile, investment objectives and time horizon. The only thing an investor needs to do is to pick a few funds of the shelf and achieve his investment objectives, both short-term as well as long-term.

Today, mutual fund industry manages assets worth Rs. 3,50,00 crore. If one were to compare it with the bank deposits, the industry has a long way to go. At the same time this gap signifies the potential that this investment vehicle has to grow going forward. As making money grow at a healthy real rate of returns i.e. returns minus inflation becoming increasing difficult through traditional instruments, more and more investors are likely to adopt the mutual fund route for investing in various asset classes.

Though mutual funds have proved their worth the world over, there are certain perceptions that have stopped investors from investing through this wonderful investment vehicle. Let us analyze some of the reasons due to which investors have failed to entrust their hard earned money to mutual funds and also discuss as to how these common mental hurdles can be overcome:

I don’t have the capacity to take risk of investing in mutual funds

Though over the years mutual funds have expanded their product line to suit just about any and every type of investors’ needs, a section of investing public still feels that mutual funds invest only in equities and hence are a risky proposition. The fact, however, is that mutual funds offer many options for conservative investors too.