If you want to invest in mutual funds, then you should keep in mind that what can be the disadvantages of mutual funds and which people should not invest in mutual funds.
Mutual funds do not have guaranteed returns like FDs or other funds. In such a situation, if you cannot take risk on your investment, then you should not invest in mutual funds. Every stock that forms part of your MF portfolio carries a certain element of risk. It depends on the market and maybe it can hurt you too. If your investment in equity mutual funds is sustained for a longer period, then the risk appetite is reduced.
Who does not agree to pay the extra charge
Your investments are charged in the form of expense ratios to handle mutual funds. It seems less in the beginning, but later it becomes more. Therefore, if you think that you will not pay any charge in investment, then do not invest in mutual funds. Also, if you withdraw money in a year, then a charge of 1 percent Exist Load is also to be paid.
Don’t invest for long
Now many mutual funds have a lock-in period and invest in it only if people feel that they do not need the money for a long time. If you do not want to invest for a long time and cannot lock the money, then this is not a good investment option for you.
Don’t want to pay tax
When you invest in any other fund, you get income tax exemption. If you want that there is a discount on investment in mutual funds as well, then it is not so. Mutual fund returns are also taxed, which reduces your profits by a few percentage points.
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