What stops most Indians from trying out mutual funds?

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There is hardly any investment option that makes better sense for an average investor than mutual funds. But despite all the inherent advantages, mutual funds are yet to find acceptance among the majority of Indians. So, what is it that stops investors from trying out mutual funds? Is it high risks or they find it too complicated to understand?

Cafemutual tried to find out the answers in a recently conducted study titled ‘‘Rediscover the Indian Investor’. The study found ‘risks’ to be the biggest deterrent. In the survey, 48% of the participants who were yet to invest in mutual funds said they found it too risky. The other most common answer was that they were not aware of how mutual funds worked.

Of the rest of the participants who had never invested in mutual funds, 6% said they were unaware of it and another 6% said they have heard bad things about it.

The survey covered over 3,000 respondents – 2,299 males and 768 females. Of these, 529 participants had never invested in mutual funds. The survey was done through physical interviews and the sample size includes investors who had invested their money in at least one financial product.

Interestingly, a higher percentage of millennials compared to non-millennials were not investing in mutual funds due to associated risks. 51% of the millennial participants cited ‘risks’ as the key deterrent as against non-millennials (46%).

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