Most of the people who call us are not short of money or intent. They are held back by something a colleague, a relative or a forwarded message told them years ago. Here are the seven beliefs we correct most often, and what is actually true.
1. "You need a big amount to start"
Most mutual fund schemes accept a SIP from ₹500 a month, and some from ₹100. What matters far more than the starting amount is the starting date, because compounding needs years to do its work.
Take two people. Meera starts a ₹2,000 monthly SIP at 25 and keeps it going till 55. Her colleague waits till he "has enough", then starts ₹4,000 a month at 35 and also stops at 55. Both use an assumed rate for illustration of 12% a year.
| Monthly SIP | Years | Total put in | Value at 55 | |
|---|---|---|---|---|
| Starts at 25 | ₹2,000 | 30 | ₹7.2 lakh | about ₹70.6 lakh |
| Starts at 35 | ₹4,000 | 20 | ₹9.6 lakh | about ₹40 lakh |
The late starter puts in ₹2.4 lakh more and ends up with roughly ₹30 lakh less. The 12% is an assumed rate for illustration only; actual returns can be higher, lower or negative in any year. You can try your own numbers on our cost of delay calculator.
2. "Mutual funds means the share market"
Equity funds invest in shares, yes. But a large part of the industry is in debt funds, which lend to the government and companies, and liquid funds, which hold very short-term paper and are often used to park money for a few weeks or months. Hybrid funds mix the two.
So the right question is not "are mutual funds risky?" but "which category fits this goal?" Money for a holiday next year and money for retirement in 25 years should not sit in the same place. Our pages on debt funds, liquid funds and hybrid funds explain where each one fits.
3. "A fund with a low NAV is cheaper"
NAV is just the value of one unit. A fund at NAV ₹10 is not a bargain and a fund at ₹100 is not expensive. Put ₹1 lakh into each and you get 10,000 units of the first or 1,000 units of the second. If both portfolios rise 12% in a year (assumed rate for illustration), the first goes to ₹11.20 a unit and the second to ₹112. Both holdings are worth ₹1.12 lakh. Same result.
What decides your outcome is what the fund owns, what it costs, and how long you stay. A new fund offer at ₹10 has no special advantage for that reason alone.
4. "Buy whatever topped the charts last year"
Every January, the previous year's top performers get shared widely. Very often they are the funds that took the most concentrated bet in whatever theme ran hardest, and the same concentration can hurt the following year. Chasing them usually means buying after the rise.
We look at rolling 5-year returns against the fund's own benchmark, how far it fell in bad years, its cost, and whether it suits your goal. A fund that has stayed reasonably ahead over many 5-year windows is more useful to you than one that had a single brilliant year. For more on this, see index funds or active funds.
5. "SIP is a safe product with a fixed return"
A SIP is not a product. It is a way of paying: a fixed amount goes into a fund of your choice every month. If the fund is an equity fund, your SIP carries equity risk. The value will fall in some months and some years.
What a SIP does well is spread your buying over time, so you buy more units when prices are low and fewer when they are high. It also removes the urge to time the market. That is helpful, but it is not protection from loss. Read what to do with your SIP when the market falls before the next fall, not during it.
6. "More funds means more safety"
We regularly see portfolios with eight or ten funds. When we list what those funds actually own, three large cap funds hold almost the same 30 companies, and two flexi cap funds overlap heavily with them. The investor has more paperwork, not more spread.
For most families, two to four funds across different categories do the job. Spread comes from mixing categories and asset types, equity, debt and perhaps some gold, not from adding more schemes of the same kind. Our asset allocation guide covers this in more detail.
7. "Your money gets locked in"
Open-ended funds can be redeemed on any business day. Money from most equity and debt funds usually reaches your bank in one to three working days. A few things are worth knowing:
- ELSS tax saving funds have a 3-year lock-in for each SIP instalment.
- Many equity funds charge a small exit load, often around 1%, if you redeem within a year.
- Selling may create capital gains tax, which depends on the category and holding period. Rules as of 2026, check current rules.
Easy access is a good thing, but it is also why some people stop SIPs at the wrong time. Keep a separate emergency fund so that a sudden expense does not force you to sell long-term money.
The short version
- Start small, but start early.
- Pick the category for the goal, not for the headline.
- Ignore NAV levels and last year's rankings.
- Treat a SIP as a habit, not a shield.
- Hold a few funds that do different jobs, and review them once a year.
If you are new to all this, begin with what a SIP is and our mutual funds page. If you already invest, a portfolio review will show overlap and costs in one sitting, and the glossary explains the terms you will see on statements.
General information, not a recommendation of any scheme. Return figures are an assumed rate for illustration. Tax and exit load figures change; rules as of 2026, check current rules. Mutual fund investments are subject to market risks, read all scheme related documents carefully. Past performance may or may not be sustained in future.
