SIP investments in mutual fund schemes have become one of the most preferred ways to invest in mutual fund schemes in India. While it is very convenient for any investor to make an SIP investment in 2024, certain myths regarding SIP investments still remain widespread among investors. For instance, do you think that your SIP contributions have to be very large amounts for you to earn high returns over time? Have you been waiting to gain enough experience with stock investing to finally start investing in mutual fund schemes? Knowing about these five major myths can help you get started on your investment journey at the earliest.

Busting five myths related to mutual fund investments –

Here are the top five myths surrounding mutual fund investments that you must not believe at all costs –

One has to be a seasoned investor to invest in mutual funds: SIP investments are considered to be the best way for a first-time investor to start their investment journey. It is true that the investor learns a lot as and when they invest consistently in mutual funds. However, one does not have to be an experienced mutual fund investor to start their investment journey. Furthermore, even as a first-time investor, you can benefit from the knowledge of experienced professionals while investing in mutual funds, as most of them hire fund managers who take the investment-related decisions.

Mutual fund SIP investments need to be large amounts: It is a widely held belief that mutual fund schemes only yield higher returns when the investor invests large sums of money regularly. This is not true. Several examples of highly successful mutual fund investors starting their journey with a ₹ 500-per-month investment are well known. The quantum of your investment should gradually increase over time, but it need not start with a very high SIP amount.

One can only invest in equities via mutual fund schemes: Of the several categories of mutual fund schemes, equity mutual funds form only one part. You can invest in debt mutual funds, balanced mutual funds, and other categories such as hybrid funds. Tax-saving mutual funds like ELSS (equity-linked savings schemes) help you earn high returns and save on taxes too. Investing across various categories of mutual funds helps you mitigate your portfolio’s risk by spreading it across your portfolio.

Five-star rated mutual funds can never underperform: Oftentimes, investors check the review of a particular fund and if its very highly rated, assume that the fund will never underperform. Remember that market volatility can impact every kind of mutual fund scheme. You must analyse the past performance of the fund and the strategies adopted by the fund manager before investing in best mutual funds.

SIPs offer guaranteed returns: Another myth that several first-time investors have is that SIP investments in mutual funds offer guaranteed returns. While SIPs offer several advantages such as rupee cost averaging, allowing you to purchase more mutual fund units at a lower rate when markets are low, they do not guarantee returns. This is why it is important for investors to build an emergency fund before investing in a mutual fund scheme.

You must use an online SIP returns calculator before investing in any mutual fund scheme online. These are online tools that help investors compare various mutual fund schemes and choose the right one based on their investment goals.