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Welcome back to Part 2 of our Mutual Fund Myth-Busting Series! In Part 1, we tackled beginner fears like "you need a lot of money" or "mutual funds guarantee returns." In this part, we go deeper — into emotional biases, wrong expectations, and social hearsay that trip up even seasoned investors. If you’ve ever said or heard "Mutual funds are just like gambling" or "SIPs don’t work in market crashes," then this one’s for you.
Myth #6: Mutual Funds Are Just Another Form of Gambling
Reality: Mutual funds are structured, professionally managed investment products, not bets. Gambling is based on chance, while mutual funds are backed by data, research, diversification, and regulatory oversight.
Example: A Nifty 50 Index Fund gives exposure to India’s top 50 companies. That’s not luck — it’s calculated investing.
Thu Jun 11, 2026
Myth #7: SIPs Don’t Work in a Market Crash Reality:
SIPs are designed to average out market ups and downs. In a market crash, your SIP buys more units at a lower NAV — which helps you gain when markets recover. Real-life: During COVID-19 in 2020, SIP investors who stayed invested saw strong gains by 2021–22.
Myth #8: One Fund is Enough for All Goals Reality: Your goals vary — retirement, house, child’s education. One fund can’t fit all. Each goal has a different time horizon and risk appetite, so you need a diversified mix (equity, debt, hybrid, etc.). Tip: Use goal-based planning to assign funds per need — short-term goals need safer funds; long-term goals need growth-oriented funds.
Myth #9: NAV Indicates Fund Quality or Expensiveness Reality: NAV (Net Asset Value) is like the price per unit, not the performance indicator. A fund with ₹10 NAV isn’t cheaper than one with ₹100 NAV — both reflect how many units you get, not how well the fund performs. Analogy: It’s like thinking a ₹50 stock is better than a ₹500 stock — without seeing earnings or returns.
Myth #10: If a Fund Did Well Last Year, It Will Do Well Again Reality: Past performance is not a guarantee of future returns. Markets change, economic conditions shift, and fund strategies evolve. Always check consistency over 3–5 years, risk level, and current market relevance. Example: A top-performing small-cap fund in 2021 may lag during 2022–23 if small caps correct.
Conclusion
Mutual fund investing is about long-term thinking, not quick wins or myths. Every investor makes mistakes early on, but believing in facts — not fears — can turn your money into a wealth-building engine. Let go of these myths, and you’ll be one step closer to financial clarity.
Ready to cut through confusion? Connect with a trusted advisor or explore mutual funds through a risk-profile-matched app. Make investing smarter
Summary Table: More Mutual Fund Myths Busted
| Myth | Truth |
|---|---|
| Mutual funds are gambling vehicles | Professionally managed and regulated investment |
| SIPs fail during market crashes | SIPs average cost and benefit more during crashes |
| One fund is enough | You need a mix based on your goals, risk, and time horizon |
| Low NAV = cheap fund | NAV only reflects price per unit, not fund quality |
| Good past returns = good future returns | Past returns are not guarantees — look for consistency and strategy |
Dr. Satish Vadapalli
Financial Analyst
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