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A report released by Navi Mutual Fund shows that 80% investors rely on their social network and ‘fin-fluencers’ to consume information on investments, which can be a risky affair.
Commenting on this, Navi MF said that fund houses should develop and provide user-friendly educational resources and tools that simplify the concept of mutual funds and the investment process while dispelling common misconceptions. Access to such credible and trusted resources can significantly reduce the deterrents for young investors, allowing them to make more informed investment decisions, it added.
The study covered mutual fund investors and non-investors (millennials and Gen Z). It revealed some interesting insights into their decision-making and potential knowledge gaps. Overall, the study highlights the importance of greater financial literacy and dispelling misconceptions in empowering young individuals to make informed investment decisions.
Here are some key findings of the report:
- Returns are the top priority for 50% investors in selecting a fund. This is applicable for both active and index funds
- 1 out of 3 index fund investors do not fully understand the concept of index funds. As per the study, index funds are preferred owing to lower fees and positive experiences from friends and family
- Over 60% of respondents believe that mutual fund investment requires extensive financial knowledge, which deters potential investors
- The myth that a large lump sum is required to start investing discourages 1 out of every 3 potential investors even though many mutual funds allow investments with limited initial capital
