Some common myth about investment funds

Are you considering investing in mutual funds? If so, don't miss reading this article. Here we have discussed some misconceptions that most people who lack experience in dealing with these funds possess. Knowing these myths will help you manage your investments in a better way and make more money through them.

Myth 1: They are closed funds.

This statement is completely wrong. It is true that there are people who mistakenly refer to mutual funds as closed funds; however, the two terms are not synonymous. A closed-end fund like ETF is a type of investment company.

Myth 2: When managing these funds, a short-term allocation of capital gains can be offset by loss of capital. This loss can be both long term and short term.

The reality is quite different. A short-term capital gain distribution can never be offset by any capital loss. In addition, it has no economic value for mutual fund cooperatives.

Myth 3: They are more expensive than ETFs.

They can certainly be more expensive than ETFs, but not always. There are many mutual funds that are cheaper than ETFs. Your financial advisor is the best person to explain the reasons behind the high cost of a mutual fund or ETF.

Myth 4: They are only intended for people who want to make long-term investments.

If someone tells you that long-term investment offers greater benefits, he is right. However, that does not mean that you cannot invest in these funds investment options in bahrain as a short-term investor. Consult your financial advisor and he will certainly be able to inform you of several short-term schemes that will allow you to get a return on your investments within a few weeks or months.

Myth 5: You can't invest unless you have a large amount ready.

This is probably the most long-standing and common myth that prevents people from trying their money on these funds. The majority of modern funds allow both low and high investment. You will be happy to know that you will be allowed to invest even if you only have Rs. 1000 in your pocket. There are also some funds which allow investment of Rs. 500. For people planning to make big investments, however, there are no limits.