2 Important things to avoid while investing in mutual funds

Many of us heard that investors stayed invested for 15-20 years created huge wealth to their family.Thanks to the “Power of Compounding”! It works best in volatile times that too in long-term we can see it’s “magic”.

But even there are evidences that mutual fund sips(Systematic Investment Plans) created huge wealth in the long-term, if we look closely around us only 1-2% of the investors created wealth through mutual fund sips. Do you know the reason why?-

  • Lack of patience to hold for long term
  • Frightened on the market volatility in the short-term
  • Not satisfied with the market returns(They see short-term returns and exit their holdings in a hurry)
  • Entering and exiting mutual fund schemes to catch “The Best Performing Fund”

But history proved that if you stayed invested through mutual fund sips for the long-term, power of compounding works in favor of you! Financial advisors and market experts suggests to continue your sips irrespective of the market conditions, if you continue your sips in volatile times, then you will see “Compounding Power” in the long-term

Today we are living in digital era. We can trace any information on google, then why not on mutual fund sips? Take example of any fund with 15-20 years track record trace-out its sip journey you will be surprised to see “crores” in its portfolio.

So try to avoid these 2 things in your wealth creation journey. You should avoid-

  • Daily checking of your mutual fund portfolio
  • Churning the portfolio(shuffling mutual fund schemes)frequently

Though reviewing your portfolio is recommended, it would not distract magic of compounding. If you closely observe the history no fund retain No.1 position at all times. So if you churn your portfolio frequently you would loose compounding power. At the same time if you stayed invested for long-term even in an average performing mutual fund, you would earn “Crores”, still not trusting! Search on google on funds having 15-20 years track record, then you will be surprised to see “Magic of sip” in the long-term.

Take for reference- “www.moneycontrol.com/mutual funds” and “www.valueresearchonline.com”. These 2 sites replicates mutual fund sip returns accurately. Have a look at them and you will realise that- “Investing long-term through mutual fund sips will create enormous wealth than frequent churning of portfolios”.

So if you want to create wealth then stay invested in mutual funds for long-term irrespective of the market conditionhs

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