How my first equity (mutual fund) investment has fared?
- Almost ten years since I made my first equity mutual fund investment, the amount is now more than seven times the original investment after a lot of ups and downs. ( CAGR- 22.7%- tax free)
- This was an NFO investment and the product was "sold" to me. In recent years, I am not a fan of NFOs.
- Even if the markets fall by half now, the investment would have grown 3.5 times, which is not bad
- Key learning during last 10 years
- Direct equity investment is not easy for an individual investor . Need a lot of time, research and also luck to beat the market.
- Investing through diversified equity fund or balanced funds with a track record ( through SIP) is one of the easier option available to retail investors.
- Dont track market news on a day to day basis.
- Have very reasonable expectations from equity market in terms of returns (inflation + 2-5%).
- Time in the market is more important than timing the market- but if you buy any asset with a high valuation ( including blue chip shares or equity MF), you may have to wait for a very long time to even recover your capital. So, try to practice low P/E or low P/B investing which is easier said than done.
- Understanding risks involved is very important before investing in equity - Volatility, average return, standard deviation ,etc.
- Finally, Power of compounding is amazing. Experience it- to realize it :-) .
- Happy new year and happy investing!
This post is not a recommendation to buy any mutual fund.