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Money myths: Are you also a victim of these myths? Only if you survive from them will you be able to make money

Highlights

Misconceptions create hurdles in doing proper financial planning.
Because of these people also take wrong investment decisions.
One should not invest only keeping one fact in mind.

New Delhi. Savings and investments are very important for future financial security. But, there are many myths in the mind of most people while thinking of saving and investing. Some myths or delusions are ingrained in the minds of many people in such a way that they consider them to be completely correct. The biggest reason for falling prey to myths is the lack of financial literacy. As a result, the investor takes wrong financial decisions.

In such a situation, it is very important for every investor to understand the difference between these myths and reality related to investment. These myths are the biggest hurdle in the way of achieving your financial goals. So let’s know today about those myths related to investment, which often fall victim to a common investor.

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Fund with low NAV
Many retail investors are confused that Mutual Funds with low Net Asset Value (NAV) are cheaper. This misconception is often used to promote new fund offers (NFOs), as the face value of their units is Rs 10. NAV is the value of the mutual fund unit. It gives the per unit value of the fund at any point in time. That is, what is the cost of one unit at a given point of time, this is the NAV.

Many factors affect the NAV of Mutual Funds. Because, the NAV of the fund would have been determined on the basis of the market value of its constituent investments. Hence the NAV of a well managed fund can grow faster than that of another fund. Similarly, the NAV of the new fund is higher than that of the old fund. Therefore, it is not right to take investment decision in any mutual fund on the basis of NAV only.

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retirement planning old age work
Retirement planning is not included in the priority of most people. They believe that this work is not to be done in youth. Due to this belief, they postpone their retirement plan. If you have the same belief then you are hitting your ax on your foot. The sooner you start retirement planning, the more benefits you will be in. For example, if a person does retirement planning from the age of 30 and invests Rs 10,000 per month in equity funds through SIPs, by the age of 60, he will create a retirement corpus of Rs 3.49 crore. 3.49 crore fund, he will get it only after getting an average annual return of 12 percent. If the returns are high, then a bigger fund will be created. At the same time, if you start investing for retirement corpus from the age of 45, then you will have to make a monthly investment of Rs 70,000 to build a corpus of 3.49 crores by the age of 60.

It is not wise to invest small amount
Many people with low income and savings believe that investing a small amount anywhere does not help. However, his assumption is completely wrong. The minimum amount for lump sum investment in most MF schemes is just Rs 5,000. Similarly, in most mutual fund schemes one can invest even as low as Rs.1,000 through SIP. Investments made with less money than SIP also give a lot of benefits because they give compound interest.

Fixed income investment best
Many investors consider fixed income investment schemes like Public Provident Fund, National Savings Certificate, and FD etc. to be the right way to make a big corpus in the long term. He believes that investing in equity is not right for this purpose. However, his assumption is completely wrong. This is because the return of equity is higher than the rate of inflation. Whereas, the returns available in options like FD are not able to beat inflation.

Tags: business news in hindi, Investment, Investment tips, Money Matters, mutual fund

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