Investing in Mutual Funds is as safe as paying for a train ticket and boarding the train. Wait, How is that similar?
- The train ticket is issued against your name. So is a mutual fund folio.
- A personal identify check is done against your name (at some point). In mutual fund investments, a KYC check is done as well.
- Ticket issued against a person cannot be transferred to someone else. So is a mutual fund investment.
- Any ticket refunds go back to the mode of payment.
Mutual funds are safer because:
- The money used to pay HAS to come from only the investor’s bank account.
- Any withdrawal HAS to go back to same account. So how can anyone steal your money, unless they hack your bank account (but that’s a different topic)
- No body else can change bank a/c details on your folio to fraudulently take away your money. You must submit a canceled cheque to AMC.
A Mutual Fund investment is also similar to train travel in many other ways too:
- You can choose where to travel to based on your preferences.
- The experience can be boring or exciting.
- Often you do it with and for the family.
- There may be brokers involved and it is YOUR decision to avoid them to get a better deal. In case of mutual funds, you can avoid them by going for direct plan mutual funds.
- The journey is ultimately rewarding and takes you to a destination of your choice. With mutual funds, plan well and arrive at a place of safety meeting your life’s financial goals. Happy investing!
