7 Tips to Overcome Fear of Investing in Mutual Funds

A step-by-step guide on how to invest in mutual funds | UTI Mutual Funds

When it comes to mutual funds, you must have heard instances of equity markets performing much poorly than expected. One of the biggest reasons for it was the lack of retail investors participating in the funds in these markets. There are numerous reasons behind this lack of participation, but the common factor in most of them is fear. Whether it is the fear of not knowing what the financial instrument is or fear of knowing and thinking you might fail, it might keep one from investing. 

There are seven emotions that every person feels and bases the thing they do on. These include anger, fear, disgust, happiness, sadness, surprise and contempt. Out of these, fear is the one that people feel is difficult to overcome. Hence, if you feel afraid of investing in mutual funds, you might have to take some considerable efforts. Here are a few tips to help you:

Get more knowledge about mutual funds

If you are fearful about investing in mutual funds, you should take time to know more about them. The simple truth is that if you do not invest simply because you are afraid, you will always be afraid. On the other hand, if you decide to read and research about the topic, and interact with the existing mutual fund investors in your social circle, you might feel more ready to make that investment. 

While knowing about the product does not guarantee that you will get high returns, but it gives you more awareness of what the successes and failures of your investment journey can be. Knowing this, you can plan better, take your financial goals, and risk appetite into account. 

Start small 

If you are afraid that your investment in mutual funds will fail, make sure you are prepared for the possibility. Gains and losses are a regular part of investing. Hence, facing a loss in mutual funds is a real possibility. However, there is no reason to be afraid and not invest at all. Instead, you can invest a smaller amount and see how the fund responds. If it performs well, invest more. If it ends up failing, as you feared it would, you can take a large amount of comfort in the fact you did not lose a huge amount in the process. 


One of the greatest investment mantras is that you should never put all your eggs in one basket. It means that you should not put all your money into one investment option. With mutual funds, there are various investment options available to you wherein you can invest in mutual funds online with ease. The best part is that you don’t have to choose just one. For example, there are mutual funds that work on equity and ones that work on debt. Both of these are equally great options and should be considered by every investor. If you feel uncertain about a certain fund, do not put all your money into it. Select another fund that has high chances of returns and make an investment. This way, if one fund underperforms, you have another one that is performing well.