Investment Mythbuster

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Have a look at some common Mutual Fund myths, and equip yourself with the necessary knowledge for investing wisely.
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Myth 1

It is never too early to start investing.

Right or Wrong ?

You are Right.

You are Wrong.

The earlier someone starts investing the better it is. Delay leads to considerable opportunity loss. The earlier you start, the sooner your money starts to get compounded and your wealth starts to grow!

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Myth 2

It's better to consume NOW than invest...who knows what will happen in the long run!

Right or Wrong ?

You are Right.

You are Wrong.

Investment helps you maintain your lifestyle and achieve your dreams, tackling inflation in the long run, and cushioning you against any unforeseen events.

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Myth 3

Only by saving, we can prepare to meet the financial requirements of our future life goals

Right or Wrong ?

You are Right.

You are Wrong.

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

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Myth 4

Inflation erodes the value of money and you cannot stop it! If the current inflation rate is around 6% p.a., your savings actually grows at less than 6% p.a.

Right or Wrong ?

You are Right.

You are Wrong.

After adjusting the inflation rate, the return you generate from savings instruments, your money barely grows in real terms.

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Myth 5

Cost of major life needs (i.e. wedding, hospitalization, higher education) increases at a rate more than average inflation.

Right or Wrong ?

You are Right.

You are Wrong.

The cost of major life events (wedding, hospitalization, higher education, life after retirement etc.) increased ranging from 110%- 155% in last 10 years. Whereas total inflation has been 95% during that period. Costs of life’s major events are increasing way faster than average inflation rate.

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Myth 6

"Consumption after saving” is the right approach to grow your wealth."

Right or Wrong ?

You are Right.

You are Wrong.

It is always better to save first and then consume to meet your major life needs (wedding, hospitalization, higher education, life after retirement etc.) on time. Else, you may have to borrow or liquidate your assets at the time of needs. This line doesn’t sound good

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Myth 7

Investment helps you get significantly higher amount of tax rebate than savings. Investment in Mutual Fund / SIP is treated as eligible investment for tax rebate for the full amount.

Right or Wrong ?

You are Right.

You are Wrong.

As per Income Tax Ordinance, 1984, you get no tax rebate on FDR and only up to 60,000 Tk. of deposit in DPS in a year. But you get Tax Rebate on the full amount invested in Mutual Fund/SIP.

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Myth 8

I don’t need life insurance right now. I am still very young and have little chance of a sudden death / disability

Right or Wrong ?

You are Right.

You are Wrong.

According to a research on Mortality Trend in Bangladesh (www.ica2014.org), 57% of all insurance claims were from people who died in the age bracket of 20-40 years. So, if you don’t have one, you should consider getting insurance coverage for your family’s safer future.

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Myth 9

The interest rate/return on investment/savings is the only criterion to select investment/savings products.

Right or Wrong ?

You are Right.

You are Wrong.

Interest/return is not the only payoff from savings/investment. Smart investing can create value for investors by providing tax savings, risk management and liquidity as well as leveraging investment size to avail add on benefits at low cost.

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Myth 10

What is the best mode of investment in capital market to mitigate risk?

Right or Wrong ?

You are Right.

You are Wrong.

By investing regularly, the investor takes the benefit of investing across market cycles (both up-market and down-market). As a result, Taka-Cost averaging happens and that positively affects the potential return. This also negates the effort required for monitoring the stock market. Being able to invest in the market at absolute low is theoretically very lucrative. But very few legendary investors have been able to consistently call market lows.

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Congratulations, John Smith.

Good Job, John Smith.

Good Start, John Smith.

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