Most of what we believe about money we learnt at home, long before anyone showed us a number. Some of it is wise: spend less than you earn, avoid debt you cannot repay, keep something aside for bad days. Some of it quietly costs families lakhs over a lifetime. Here are ten common beliefs, checked against the data, with what to do instead.
1. “Gold never loses value”
Partly a myth. Gold protects against crises and a falling rupee, and over very long periods it has done well. But it can go nowhere for years. In rupee terms, 10 grams of gold cost about ₹31,000 in 2012 and still about the same in 2018 — six years of no return while everything else got dearer. Jewellery also loses its making charges the day you buy it.
What to do instead: treat gold as insurance for the portfolio, around 5–15%, held through gold ETFs or gold funds rather than as the whole plan.
2. “Property prices only go up”
Myth. In several large Indian cities, home prices barely moved for years after 2014 while inflation ran at 4–6% a year — a real loss for those owners. Property is also expensive to buy and sell once you add stamp duty, registration and brokerage, it needs maintenance, and you cannot sell one room when you need ₹2 lakh for a hospital bill.
What to do instead: buy a home to live in when the numbers work; for wealth building, prefer assets you can add to and withdraw from in small amounts.
3. “Fixed deposits are risk-free”
Half true. Your capital is safe, and DICGC deposit insurance covers up to ₹5 lakh per depositor per bank. But a 7% FD for someone in the 30% tax bracket earns about 4.9% after tax, before cess. If inflation is 5%, the real return is about zero. The risk is not that the bank loses your money; it is that your money slowly buys less.
What to do instead: use FDs for money you need within a few years and for your emergency fund. For goals ten or more years away, money that only keeps pace with inflation is not enough.
4. “Mutual funds are for rich people”
Myth. A SIP can start at ₹100–₹500 a month in many schemes, and SEBI has encouraged small-ticket SIPs of ₹250 to bring first-time savers in. More than five crore Indians now invest through mutual funds — teachers, shopkeepers, drivers and pensioners, not only the wealthy.
5. “A fund with a low NAV is cheaper”
Myth. NAV is simply the value of one unit. Put ₹1 lakh into a fund at ₹10 NAV and you get 10,000 units; put it into a fund at ₹500 NAV and you get 200 units. If both portfolios rise 12%, both investments become ₹1,12,000. What matters is how the NAV grows, not its starting level. Our article on what NAV really means explains this in detail.
6. “Insurance is a good investment”
Mostly myth. Traditional endowment and money-back policies have typically returned about 4–6% a year, with only modest life cover. Compare two ways of spending ₹50,000 a year for 20 years:
| Choice | Life cover | Money after 20 years |
|---|---|---|
| Endowment policy earning about 5% a year | Usually ₹5–10 lakh | About ₹17 lakh |
| Term plan (about ₹12,000 a year) + SIP of the remaining ₹3,170 a month at an assumed 10% | ₹1 crore | About ₹23 lakh |
Term premium is a typical figure for a healthy 30-year-old non-smoker; your quote will differ. The SIP return is an assumption, not a promise.
What to do instead: keep insurance and investment apart. Buy enough term cover, then invest separately for your goals.
7. “I am too young to think about retirement”
Myth — and the most expensive one. At an assumed 12% a year, ₹5,000 a month from age 25 grows to about ₹2.8 crore by 60. Starting the same SIP at 35 gives about ₹85 lakh. Ten years of delay costs more than two-thirds of the result, because the years you skip are not the small early years — they push back the large final years of compounding.
8. “More funds means more diversification”
Myth. Five large-cap funds largely own the same 50 or so companies. Owning all five adds paperwork, not safety. Three or four funds across different categories — say, a flexi cap fund, an index fund and a hybrid or debt fund for shorter goals — usually diversify better than ten similar ones.
9. “The dividend from my fund is a bonus”
Myth. In an IDCW (income distribution) option, the payout comes out of the fund’s own value. If the NAV is ₹20 and the fund pays ₹2 per unit, the NAV drops to about ₹18 — it is your own money returned to you, and it is taxed at your slab rate. The growth option keeps that money invested and compounding instead.
10. “The stock market is gambling”
Myth over the long run. In the short run, markets are unpredictable and can fall 30% or more. Over 10–15 years, diversified equity has historically followed the growth of company profits. Gambling is a bet in which someone must lose; owning a small share of hundreds of businesses is not. What does resemble gambling is trading on tips and borrowed money — which is a choice, not the market itself.
Why these myths survive
Most of them were sensible once. When there were no mutual funds and banks were far away, gold and land really were the only stores of value a family could hold. The world changed faster than the advice. Keeping the wisdom — save first, avoid debt, think long term — while updating the tools is what the next generation needs.
Frequently asked questions
Is it wrong to buy gold jewellery?
No. Buy jewellery to wear and enjoy. Just count only the gold value, not the making charges, as part of your savings.
Are endowment policies always bad?
They suit a few people who value forced, guaranteed saving above returns. For most families, term cover plus a separate SIP does both jobs better.
Test yourself with the Myth or Fact game in the Story Corner, and see how a real SIP would have behaved in any fund with the Fund Simulator.
Figures above are illustrations based on assumed rates of return and are not a promise or guarantee of future returns. Mutual fund investments are subject to market risks, read all scheme related documents carefully. WishWiseWealth is an AMFI-registered Mutual Fund Distributor (ARN-188221).