As we already mention in our last blog post that, return nor are the biggest factor or motivation for involve in any investment related matters truly or in other words Kitna Deti Hai?
Thus, we as investor when started our investment journey; solely depended on traditional investment avenue like fixed deposits (FD) respectively. Thus, in case of FD asking for kitna deti hai is a wise question. Because in FD interest rates are fixed for the chosen term! But in mutual funds?
Thus, don’t limit yourselves here with return nor! But most wise question could be asked here is kitna milta hai?
But who told you that, kitna milta hai? Because we all already know that “mutual fund investments are subject to market risk and please read all offer documents before investing”. But here we have a question! If we all read all offer documents before investing than could we come to know kitna milta hai?
Then simple answer is NO! Because mutual funds returns are just a nor only! Its have been no rationalization with kitna milta hai. But basically, it’s gives much lower than our assumptions. Thus, most cases not even beating the FD rate itself!
Like up to 2008 when equity mutual funds given 18% to 26% respectively. At that time our respective mutual fund distributors (MFDs) given assumption of 15% if invested for long-term. Even some reputed CFP practitioner & finance professional also given same assumption truly.
But after 14 Years, the assumed 15% is now 11% up to 04th April 2022 and if we considered present Russia & Ukraine war crisis than it was between 9 to 10%. At the same time in 2008 FD rate was at 9% approx. Yeh you could argue on that, 14 years FD is not available in system. Ok we agree! Thus 2008 to 2018 we earned at 9% and 2018 to 2022 we earned at 7%, on average our total gain on FD portfolio is 8% and mutual fund stand at 9, 10 or 11% respectively.
Now are you investing in mutual funds anymore? Is it a lucrative deal for you?
The simple answer is NO! Where we get risk-free 8% why we go with mutual funds for same or nominal level of returns!
Now what about direct investors? Do you think saving a broker commission is give you a great investment experience? Thus, its another topic of argument, leave it.
Thus, these types of investment experience we felt when market is in high valuations and the entire picture are completely different if we are investing in low or average valuations. Like, instead of 2008 if we are investing in 2009 than our investment return was 14% from NIFTY and in equity mutual funds it was 18% respectively.
Thus, every time is good time for investing! But we are not investing because its high market and wait for down market than its called market timing! And timing the market close to impossible. We may be successful in timing the market only once in a period of 10 to 15 years. But over three to four times market will beat us in same time frame truly. Don’t worry! We will write a separate blog on down market especially in coming weeks.
Thus, we may have put many others argument here. Like its just unlucky by chance, it’s impossible that, FD couldn’t beat equity mutual funds, etc.
But must remembered truth is truth! You could pick any period of your choice and cheek it. You could find that; your present FD rate or little higher returns (1 to 2%) is your future real return from equity & equity mutual funds truly and only way you will get higher returns if you able to buy low!
So, what’s up now?
Never investing in equity mutual funds and search the experience in fixed deposit space! No, we don’t tell you so. If there is a problem than their solution also exists, and that solution even may be available at your doorstep!
And that is non other than your mutual fund distributor (MFD) or a finance professional. Your distributor role is not advised you right mutual fund scheme. But his/her role is to provide solid asset allocation strategy to achieve your goals. Because asset allocation as a strategy promised that your 90% of investment return would achieve if you practiced a solid asset allocation truly.
Thus, don’t be confused here when planning for a solid asset allocation. Balanced advantage fund, asset allocator fund, dynamic asset allocation fund or multi-asset funds are not the real sense of asset allocation!
If we considered same 2008 to till 04 April 2022 than FD return was 9% and most popular balanced advantage fund return was also 9%.
So, concentrate on right asset allocation not on mutual fund schemes.
Swayam Bichar Kijiye!
For any query or feedback please let us know below or mail us at: prabirsharma@gmail.com
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