Investing in MF directly and correctly demands time, resources, knowledge

Investing in mutual funds directly and correctly demands time, resources, knowledge, “and a clear understanding of the investment landscape, which is often lacking in general investors,” says Misbah Baxamusa, CEO, NJ Wealth in an exclusive interaction with Bizz Buzz.

How does the assistance of MFDs differ from direct investing?

In today’s fast-paced world, information is readily available at the fingertips of every investor. From scheme details to investing in different investment avenues, everything is just a click away. This easy access to information raises a vital question of not just ‘where’ to invest, but ‘how’ to invest. When it comes to mutual fund investing, or for any kind of investment, there is no ‘one-size-fits-all’ solution.

Every investor is different, with unique financial needs, different ways of reacting to market fluctuations, and unique risk profiles. Investing in mutual funds directly and correctly demands time, resources, knowledge, and a clear understanding of the investment landscape, which is often lacking in general investors. Moreover, building wealth in the long term requires patience, commitment, and maintaining rationality even during market volatility.

Even if an investor manages to gauge his financial needs correctly, understand his risk profile, and build a meticulous investment roadmap, it might be difficult for him to maintain discipline, consistency, and behavioural balance during market downturns, essentially avoiding impulsive decisions. Hence, in such a situation, the guidance of a mutual fund distributor can prove to be pivotal.

An MFD’s role goes beyond just suggesting the right schemes. They start by understanding an investor’s financial needs, risk profile and creating a tailored roadmap. More importantly, they provide the steady hand needed to navigate volatile markets, helping you avoid emotionally driven decisions that could derail your long-term wealth-building journey. Over time, the guidance of a mutual fund distributor can turn market uncertainties into opportunities, helping you move closer towards financial aspirations, regardless of market conditions.

How are MFDs adapting their strategies to educate and engage with potential investors in Tier 2 and 3 cities, where financial literacy may be lower?

The penetration of mutual funds and financial literacy, currently, remains much lower in tier 2 and 3 cities compared to urban tier 1 cities. This highlights both a challenge and a tremendous opportunity for mutual fund distributors to spread awareness, create new mutual fund investors, and help a wider segment of the population fulfil their financial needs and build wealth.

To bridge this gap in awareness, MFDs are adapting a multi-pronged approach. We conduct both physical and online meetings to spread awareness among investors. We held investor education seminars across the country and have hosted about 8.38 lakh guests via physical meetings and about 4.79 lakh guests via online meetings. Moreover, to instil financial literacy among the youth, we have created an online financial literacy awareness programme, which is a completely free-of-cost programme for college students. Furthermore, all the marketing material, like infographics, flyers, and pamphlets that we design, are created in multiple languages to ensure they resonate with and are accessible to the right target audience.

With the increase in awareness and as first-time investors from these cities participate in mutual fund investing, the focus of investors is simple yet impactful. As MFDs, we continue to prioritise need-based investing, personalised investment road map, regular portfolio reviews, and constant hand-holding throughout the investment journey. By combining digital accessibility with personal interaction, we as distributors are trying to create a strong support system that not only initiates investments but nurtures them for the long term.

As the investment landscape in India develops, investments from tier 2&3 cities will play a critical role in the growth story, ensuring that the benefits of wealth building through mutual funds reach every nook and corner of the country.

What are some of the hurdles in the MFD business?

One big challenge faced by MFDs is the servicing of Gen Z investors. Gen Z investors are willing to take the risk, and find investment avenues like mutual funds ‘boring’. Hence, they indulge in highly risky investment avenues such as trading, options, and futures. A report by SEBI shows that 91% investors made losses by investing in futures and options in FY22 and FY24.

Hence, an important task for distributors is to actively engage with Gen Z investors by making mutual fund investing more relatable, accessible, and aligned with their aspirations. Moreover, explaining them the importance of delayed gratification and the benefits of patience, consistency, and discipline in investing is crucial.

By presenting mutual funds as a dynamic yet reliable wealth-building tool, supported by real-world examples, relatable analogies, and modern engagement, MFDs can help bridge the gap between Gen Z’s appetite for excitement and the need for prudent, long-term financial assessment. In doing so, distributors not only guide them toward smarter investment choices but also help nurture a generation of financially resilient investors.

What is your advice to investors?

Our main advice to investors is to remain patient and consistent while investing in the market. Rather than chasing quick returns and instant gratification, a disciplined investment strategy can help build sustainable wealth over the long term. It is rightly said that “Time in the market, is more important than timing the market,” and the key lies to investment success is staying invested, regular portfolio reviews, and making informed long-term investment decisions.

The mantra to building wealth is quite simple. But following something that is simple, is not always easy. Emotional and behavioural biases often end up as hurdles in the investment journey, derailing investors from achieving their long term financial needs. Overcoming these hurdles often requires guidance. An this guidance can be provided by an experienced mutual fund distributor who can help investors see the bigger picture, rather than focusing on the minor ups and downs of the investment journey.

With the right guidance, patience, and discipline, we are confident that investors can rise above short-term noise, stay aligned with their needs, and allow the power of compounding to work in their favour, turning financial aspirations into lasting financial success.

EoM.