In this article, we will be sharing some of the points which help individuals, especially children to make their parents understand to invest in mutual funds (MF). So, let’s get started!
Ways to Convince Parents to invest in Mutual Funds:
1) Talk about Debt Mutual Fund First:
- An individual should first inform or educate their parents that all mutual funds do not invest only in the stock market.
- He/She should tell their parents about debt mutual funds first which has a lower risk profile than the equity mutual funds.
- One should present such mutual funds before his/her parents which have more creditworthiness or which come with low risk and average returns.
2) Taxation Benefit:
- If your parents fall into the tax category of over 30%, then you should make them understand the clear benefit of tax advantage concerning Fixed Deposits (FDs), or any other investment avenues where they are currently investing.
- Further, make them understand the indexation benefit of investing in Debt funds at least with similar returns to their traditional investment avenues.
3) Size of Mutual Fund Industry:
- One needs to create a feeling of Fear of Missing Out (FOMO) in his/her parent’s minds that they are not new to the market.
- One should teach their parents about the Mutual Funds industry is around 37 years old with Asset Under Management of above Rs. 39 Lakh Cr.
- As matter of fact, around 2.4 Cr. Indian investors have invested in Mutual Funds, hence they are not the first ones to step in.
4) Start Small:
- This is one of the important pieces of advice or points to make parents understand about MF industry. One should tell their parents to start with a small amount with which they are comfortable.
- After commencing the investing journey of parents in debt funds, take them to hybrid funds.
5) Tell them SBI and LIC have Mutual Funds:
- State Bank of India and Life Insurance Corporation of India (LIC) are two big companies in India with strong brand names and Government company value.
- And since Indian parents are more comfortable with the safety and the Government companies, they should be educated about mutual funds of SBI and LIC as well.
What Should Individuals Do?
All the points discussed above are some of the steps which can be tried out by the individual who is trying to convince his/her parents to invest in mutual funds. Here, one should be well aware of the positive and negative of the market conditions as well and hence should pass correct information only to their parents.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.