Financial Fix | Are Mutual Funds Risky?

By Irshad Mushtaq

Just invest in mutual funds and feel secure knowing they are regulated by SEBI and the Government of India. Don’t fall for the “Hera Pheri” misconception – mutual funds are a safe and profitable investment with long term thinking .

Many people assume that mutual funds are risky and won’t provide good returns, fearing scenarios similar to the film “Hera Pheri,” where money is stolen or mismanaged. However, this is far from the truth. Mutual funds in India are strictly regulated by the Securities and Exchange Board of India (SEBI), ensuring they are safe and well-managed.

Government involvement in mutual funds is significant and highly regulated. These funds are overseen by asset management companies (AMCs), which are also under governmental scrutiny. When you invest in mutual funds, your Demat account holds your investments, and the data is controlled by the Government of India, ensuring security.

The key concern should be selecting quality mutual funds that can provide good returns, ideally outperforming the Nifty over a long period. Here is where an experienced financial advisor plays an essential role. Investing in mutual funds isn’t something just anyone can do haphazardly; it requires a systematic approach.

Firstly, there’s a secure e-KYC process governed by the Government of India. After completing the e-KYC, a Demat account is opened, allowing the customer to buy mutual funds through a registered distributor. These distributors are SEBI-registered, adding another layer of security.

Upon purchasing mutual fund units, they are allocated to your Demat account, which you control. Every bank account is uniquely mapped to your Demat account, and during the redemption process, the funds are transferred only to your linked bank account. This prevents any third-party intervention.

In India, mutual funds have assets under management totaling approximately 44 lakh crores INR, with numerous investors trusting this investment vehicle. There are around 44 asset management companies handling these funds, showcasing their widespread acceptance and reliability.

Investing in mutual funds, with the proper guidance and understanding of the processes, can be a secure and profitable way to grow your wealth. The government’s regulatory measures ensure that your investments are safe and managed appropriately.

Mutual funds in India are well-regulated by SEBI, ensuring safety and security for investors. With the right guidance, investing in mutual funds can be a profitable endeavor.

Learn from the insights of @IrshadMushtag, writer, investor, entrepreneur & Founder of MI Securities! Connect for valuable financial advice at [email protected]

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