4 Reasons Why People Avoid Mutual Fund Investing

Subscribe to GoodReturns
For Quick Alerts
For Daily Alerts

    Most of the people who are planning to invest or have just started to invest avoid investing in mutual fund. A mutual fund is a company that pools money from various investors and invests the money in stocks, bonds, short-term money-market instruments and assets depending on the risk taking capacity of investor.

    Before investing, one has to keep in mind that each investment carry certain degree of risk which cannot be avoided as those are external factors.

    4 Reasons Why People Avoid Mutual Fund Investing

    Here are basic reasons why people avoid investing in mutual funds

    1) Illiteracy or Unfamiliarity

    Prospective investors stay away due to less awareness on the subject and most they are happy with the conventional and conservative methods of bank deposits, insurance.

    2) Complexity Involved with Procedure

    People may find investing in Mutual Funds a cumbersome process as it takes lot of documents to go through. A layman may find it difficult to understand the process of various types of mutual fund investment which is based on the return and risk factor.

    3) Market Impact on Mutual Funds

    The famous quote which you keep hearing "Mutual fund investments are subject to market risks ... " yes, it is very true. Markets have great impact on mutual funds. The main reason here is not knowing what underlying securities your mutual fund owns. People are less aware that mutual fund also invest in debt instrument where it has nothing to do with market volatility.

    4) Performance of Funds

    Mostly people with less knowledge do is seek advise from friends and family. If any fund performs poorly they fear downside risk and withdraw themselves. Before investing one needs to understand the concept and reasons for downtrend rather than withdrawing.


    Read more about: mutual fund
    Story first published: Monday, December 8, 2014, 9:57 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Get Latest News alerts from Goodreturns

    Notification Settings X
    Time Settings
    Clear Notification X
    Do you want to clear all the notifications from your inbox?
    Settings X
    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more