Learn Mutual Funds & Investing— Mission 90 Days
The equity markets are booming everywhere. Surprisingly, India is outperforming developed markets in ways never seen before. One of the reasons for this outlier event is the huge influx of retail investors post-Covid lockdown.
There are 2 ways to look at an event
- The optimistic way
- The pessimistic way
The optimist would say “New entrants into investing are a healthy sign of a strong underlying economy” and the pessimist would say “People flocked to stock markets as their primary source of income went bust”. Which camp you would like to be a part of?
I can think of something really bad that is going to happen. No, not because the markets are going to crash or the war is going to spread but because the influx of retail participants is void of financial literacy to hold on to their gains.
Yes, that is right, most of them would have witnessed their holdings double over the last 4 years. Being a portfolio manager, I have personally seen the holdings of over 27+ clients. Few of them have managed to grow their wealth 3x too.
Selling at these levels would be stupid advice as the repercussions of tax and commissions will drag them down. A better alternative would be to impart the right financial knowledge so that they can objectively handle the situation even if there is a crash.
Don't you believe your financial quotient should also go 2x when your wealth has doubled?
I am on a mission, a mission that will last 90 days. The idea is to introduce 1 concept a day and then explain it in as simple English as possible. These concepts will be on Mutual Funds only.
Upon interaction with many investors and traders, I felt Mutual Funds are a better investment tool than individual stock picking. Primarily because most of my clients are super busy with their work. They are unable to find time to place buy/sell orders at the right time. Stocks are highly sensitive to time & liquidity.
Mutual funds on the other hand are a diversified tool and the concept of timing is not really important. Systematic Investment Plans (SIPs) take advantage of the concept called Rupee Cost Averaging (Dollar Cost Averaging). This offsets any timing-related errors that you made.
I strongly believe you will be a better & informed investor at the end of 90 days. Meanwhile, you are invited to post a query or doubt in the comments box and I will make sure they are handled with utmost sincerity.
If you find the content useful, feel free to forward it to someone who really needs it.
