Mutual Funds MythBuster

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Have a look at some common Mutual Fund myths, and equip yourself with the necessary knowledge for investing wisely.
Share your result with friends!




Myth 1

“I am too young to
start investing.”

Right or Wrong ?

You are Right.

You are Wrong.

It's never too early to start investing. Delay leads to considerable opportunity loss. The earlier you start, the sooner your money starts to get compounded and your wealth starts to grow!

n

Myth 2

"It's better to consume NOW than invest...in the long run, we are all dead!"

Right or Wrong ?

You are Right.

You are Wrong.

Investment helps you maintain your lifestyle and achieve your dreams…until death!

n

Myth 3

“It does not take a large sum of money to start investment.”

Right or Wrong ?

You are Right.

You are Wrong.

You can start investing in Mutual Funds with as little as TK 5,000.

y

Myth 4

“I will have to invest a certain amount every month.”

Right or Wrong ?

You are Right.

You are Wrong.

Investing small amounts regularly proves to be very effective.

However, for Mutual Funds, it is NOT mandatory. It is your choice. You can invest any amount at any time you wish.

n

Myth 5

“Fixed income savings keep me 100% safe.”

Right or Wrong ?

You are Right.

You are Wrong.

Fixed income investments seem “safe” as they give a guaranteed return BUT due to the effect of INFLATION, the value of your money does not grow much. As a result, you may not remain “safe” only by saving.

n

Myth 6

"Anyone can manage his/her own investments…there’s absolutely no need of an Asset Manager."

Right or Wrong ?

You are Right.

You are Wrong.

Direct investments are very risky and require expert knowledge, adequate time and sufficient funds. If you have the knowledge, time and experience, you may choose to manage your investments of your own.

However, as Asset Managers are experts in investment management, they can manage the investment risks much better and are able to generate optimized return. So, it's always a better option to let an Asset Manager manage the investment.

n

Myth 7

“Mutual Funds do not provide assured returns.”

Right or Wrong ?

You are Right.

You are Wrong.

Any INVESTMENT has risk and does not offer an assured return.

Among the options of investments, Mutual Fund is a highly regulated investment vehicle and is managed by an expert Asset Manager. As a result, down-side risk is much better-managed than other investment options.

And, although Mutual Funds do not guarantee returns, they have proven to generate greater returns than most other options in the long run by investing in a wide range of securities and managing risks.

y

Myth 8

“Mutual Funds can quickly generate high returns.”

Right or Wrong ?

You are Right.

You are Wrong.

As this is an investment vehicle, Mutual Funds always invest keeping a long-term perspective. Mutual Funds can generate much better returns in the long run but not necessarily in the short term due to market unpredictability.

n

Myth 9

“With investments in Mutual Funds, I can liquidate my investment any time I wish…”

Right or Wrong ?

You are Right.

You are Wrong.

Investors can fully / partially liquidate their investments at Net Asset Value (NAV) any time. There is no lock-in period.

y

Myth 10

“Mutual Funds cannot shield against inflation.”

Right or Wrong ?

You are Right.

You are Wrong.

As an investment option, the objective of a Mutual Fund is to generate much better return than savings instruments in a long term horizon. And in most of the cases, long-term returns from Mutual Funds significantly beat the inflation and accumulates wealth.

n

Myth 11

“There is no tax-benefits for investing in Mutual Fund.”

Right or Wrong ?

You are Right.

You are Wrong.

For individual investors, there is no tax against dividend income up to Tk. 25,000. Also, investment in Mutual Fund falls under allowable investment for tax-rebate. In addition, Mutual Fund’s income is fully tax-exempted.

n

Myth 12

“I have to be an expert to invest in mutual funds.”

Right or Wrong ?

You are Right.

You are Wrong.

Not at all!

Investments of Mutual Funds are managed by expert Asset Managers. As an investor, you just need to choose the right Asset Manager who can generate your desired return by taking care of the risk.

n

Myth 13

“Mutual Funds are ideal for long term investments.”

Right or Wrong ?

You are Right.

You are Wrong.

Though short-term return/gain is not impossible, as an investment vehicle, Mutual Funds always invest keeping a long-term perspective. And Mutual Funds can generate much better returns in the long run than most other options. So, ideally, one should invest in Mutual Funds keeping a long-term outlook.

y

Myth 14

“Mutual Funds invest money only in the equity market.”

Right or Wrong ?

You are Right.

You are Wrong.

By regulation, minimum 60% of the amount of the Mutual Funds has to be invested in the capital market. An Asset Manager therefore can invest in stocks, bonds, fixed income instruments as well as money market instruments based on the objective of the fund.

n

Congratulations, John Smith.

Good Job, John Smith.

Good Start, John Smith.

11/14

You have correctly answered 11 questions out of 14.

Learn More About Mutual Funds