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avoid investment in mutual funds

Top 5 Reasons Why People Avoid Investing in Mutual Funds

by Holistic Leave a Comment | Filed Under: Mutual Funds

Listen to this article


Mr. Varma was an ambitious middle-aged software industry professional. He was a careful investor and risk-averse. While he was technologically savvy and dreamt big for a luxurious lifestyle, there was something that put him in the rear seat. Wondering what it could be? It was a fear of investing in mutual funds. Does this strike a chord with you? Have you heard people say, “I’ve lost money in mutual funds” and kept yourself at bay from investing in mutual funds?

Table of Contents

  • Are you Avoid Mutual Funds because of Corona Crisis / Economic Crisis?
  • Ignorance about Mutual Funds
  • Not able to understand the Intricacies of mutual funds
  • The ambiguity associated with Mutual Funds in achieving returns
  • Market Volatility impacting Mutual Funds
  • Poor Performance of previous funds
  • What can be done to move on with mutual fund investments?
  • Be aware of the returns you can get from Mutual Funds

Are you Avoid Mutual Funds because of Corona Crisis / Economic Crisis?

Now as there is a huge fall in the stock market due to the corona crisis, your portfolio would have suffered a loss.

“Nothing is permanent in this wicked world – not even our troubles” – Charlie Chaplin

Yes, If you are planning to avoid mutual funds because of the corona crisis then know this is not permanent. You would have doubts like if your portfolio will recover, will there be further loss and if you will be able to reach your financial goals.

I can guarantee you that you will be able to recover faster from the market crash.

Read through these useful tips to recover faster and better from the stock market crash.

The ways for your portfolio’s recovery is given here below:

1. You can create a coronavirus financial contingency plan

There is a proverb that says “Better a thousand times careful than once dead”.

So these are the first things to do before anything else:

  • Preparing for emergencies,
  • Listing your mediclaim policies,
  • Ensuring family and COVID 19 coverage,
  • Creating an information vault.

To know more read: coronavirus financial contingency plan.

2. Will you come out of your investments during this corona crisis?

Due to the panicking situation, you would have planned to

a) Withdraw to avoid further losses and
b) To time the market bottom.

“If you panic that’s a good way to lose. You have to stay in control”. -Ted Turner

As the quote says panicking is a way to lose, so just stay invested. If you’re in an unavoidable financial need, you can use your debt investments, emergency funds, and as the last option, you can use the EMI moratorium facility.

For more info read: How to take advantage of the coronavirus crash.

3. Steps to recover faster and better from the Stock market crash.

⭐ By a portfolio revamp

If you have poor performing funds, it is better to move them into better-performing funds before the stock market recovers. This is also called as portfolio optimization. Experiments done by portfolio revamping worked.

Should you redeem and reinvest now?

To know more read: How to revamp for faster and better results.

⭐ By a portfolio rebalance

“The difference between success and failure is not which stock you buy or which piece of real estate you buy, it’s asset allocation”. -Tony Robbins

Yes, you heard it right, after a stock market crash, the asset allocation would have changed. Then you are supposed to bring it back to the original asset allocation. This is portfolio rebalance.

For more, read: How portfolio rebalance is done.

⭐ Choosing on SIP

You can either stop, continue, or increase SIP.

“Choices are the hinges of destiny”- Edwin Markham

To know the best choice on SIP, two experiments with three investor categories were conducted, each of them chose an option. One to stop, another to continue and another to increase SIP(all during the market fall). Among these who do you think earned the highest portfolio value?
In both the experiments, it was the one who chose to increase his SIP during the market fall.

    a. The one who stops his SIP incurs a loss.
    b. The one who continues his SIP gains better.
    c. The one who increases his SIP gains the highest.

Hence increasing your SIP will help you recover the fastest.

For more, read: How to play smart with your SIP.

If you want your portfolio to recover faster from this market crash, then do these before the market recovers.

It’s time that you re-think! If you’re avoiding mutual funds for some other reasons then Let’s analyze some of the other reasons why people distance themselves from mutual funds and how we can overcome them.

Also, watch the video here!

1. Ignorance about Mutual Funds

On most occasions, potential investors stay away from mutual funds due to the lack of awareness about the product. The conventional methods of bank deposits, insurance take precedence. Despite the advertisement and promotional campaigns by various asset management companies, the hesitation towards newer investment strategies is driven by unawareness and fear of unknown.

2. Not able to understand the Intricacies of mutual funds

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A mutual fund is no child’s play. It is associated with a lot of procedures and requires thorough understanding. To suit specific needs, the market has a wide array of mutual fund schemes from which an investor can choose. Analyzing the intricacies of these mutual fund schemes before investing is a cumbersome process for a layman, who would then tend towards traditional investment options such as post office or bank savings.

3. The ambiguity associated with Mutual Funds in achieving returns

This is one of the key attributes of mutual funds that wards away people from it. History gives totally a different idea. For the past 20 years, the returns achieved through equity is (based on an average of 1 year rolling) about 11%. If you look at the same data for the past 10 years, it is approximately 17%. No fixed plan could achieve this much growth in the long term. Be assured, equities are the best option to invest as they do beat inflation in the long run.

4. Market Volatility impacting Mutual Funds

Most of the investors have inhibitions about the stock market and its oscillating tendencies. They believe that mutual funds are primarily equity-oriented funds and its returns fluctuate like the share market. They are unaware that there also exists debt-related or hybrid funds which strike a balance between return and safety.

Also, mutual fund investment involved investing in gold exchange-traded funds, fixed funds, short term debt funds and funds that balance your investment. During times of market becoming unpredictable, your best cushion could be mutual funds, if disciplined investment plans are chalked out.

5. Poor Performance of previous funds

On most occasions, investment strategies are finalized based on recommendations from family/friends. If one of them suffers a loss, potential investors feel a sense of fear and isolate themselves from mutual funds. We need to analyze the root cause of such losses to decide the best course of action. As it is often said, “investment decisions should be made from the brain rather than the heart”. A possibility of one loss doesn’t mar the probability of returns of other mutual fund schemes.

What can be done to move on with mutual fund investments?

If you want to buy any product, what do you do nowadays? Check websites and read related comparisons before deciding, right. See, marketing strategies have evolved from door-to-door marketing to social media marketing. If the companies just struck with ancient methods just because they do not understand how social media works, growth in this globalized era will be tough. Likewise, it is important to understand the intricacies of how mutual funds work and start investing in it.

1. For the first time investors, mutual funds offer short term debt funds to pilot test your investment model on mutual funds.

2. Understand the intricacies of investing in mutual funds

3. Understand the risk associated with each product and how these products would react during volatile times

4. Learn about the benefits mutual funds bring in that include but not limited to broadening possibilities, periodic liquidity, professionally managed combined instruments, ability to invest in larger projects, well regulated through SEBI.

Be aware of the returns you can get from Mutual Funds

You can use the calculator, shown below.

In this calculator, you can choose your desired options to find your estimated Mutual Fund Returns.

As goes the popular saying,“Life is not a bed of roses” and so is a mutual fund investing. There is no one right strategy to invest and depends on the risk tolerance, age and goals of the individual. The popularity of mutual funds can be seen by the number of investors opting for mutual fund schemes over several years.

I agree that the system to invest in mutual funds is a bit complex and involves paperwork, etc., Will you shy away from accepting a good-paying job just because they ask you to complete formalities like filling up forms, undergoing a medical examination or an interview? You do follow these things and then only get into a job, right. In the same way, by spending quality time with the investment advisor to understand how mutual funds work will help gain a huge from your investments.

To realize the superior goals of our life, we need to create a complete and comprehensive financial plan which covers everything from goal setting to execution towards goal achieving. To create a sound financial plan, I strongly recommend you to take advantage of

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Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

Google Reviews

Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

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