Who is the biggest ENEMY No.1 of your investment? Assets or products where you invested? Strategies which you followed? Middlemen who sold you the products or YOU yourself?

ENEMY No.1 of your investment

Today morning while going through Twitter, I found this Tweet from Kalpen Parekh, President of DSP Mutual Fund India.

He was pointing towards one of the oldest funds of DSP Mutual Fund “DSP Equity Fund”. The fund was started on 29th April 1997. As of now, the fund generated around 20% returns. However, the number of investors who stood with this fund for long 24 years is less than TWENTY FOUR!!

Note:- By quoting the example of the above fund, I am not defending the DSP Mutual Fund or a fan of the DSP Equity Fund. Also, I am not representative of any mutual fund companies DIRECTLY or INDIRECTLY.

My point here to share this example is to make you aware about who is your biggest enemy in your investment journey.

ENEMY No.1 of your investment

Let us take an example of the same DSP Equity Fund and try to understand the ROLLING returns of this particular fund since inception.

I have considered the 3 years rolling returns and the results are as below:-

ENEMY No.1 of your investment

Look at the volatility the fund underwent since its inception.

The minimum returns for 1 year rolling is -51%, for 3 years it is -5.52% and for 10 years it is 7.31%

The maximum returns for 1 year rolling is 107%, for 3 years it is 31% and for 10 years it is 18%.

The probability of negative returns for 1 year holding is 28%, for 3 years it is 4.47% and for 5 or 20 years it is zero.

The probability of returns between 8-12% for 1 year holding is 8%, 3 years holding is 19% and for 10 years holding is 49%.

All these above data indicates that the journey of 24 years it not smooth. It is kind of roller coaster ride for the investors.

Hence, as per the claim of Mr.Kalpen Parekh, the number of investors who stood with this fund for 24 years is less than 24.

It is easy to say that invest for long term and expect the returns like 15% to 20%. However, during the downtrend where the product or asset gives you -30% to -50% returns, then it requires a lot of guts to HOLD and BE CALM.

JOURNEY IS TOUGH, BORING, AND REQUIRES A LOT OF MENTAL STRENGTH to generate such decent returns. But it is not impossible either. The only thing that required is the investor’s MEDIATIVE MIND.

That is why I shared the below Tweet today morning.


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7 Responses

  1. very well explained sir
    and that’s why only one person is actually enjoying complete benefit of Investing
    Warren Buffett

  2. Respected Basvaraj Ji
    Your article is an eye opener and a value addition . Going to share in my small groups for awareness to senior citizens to enable them to make sound financial decisio

  3. Dear Sir,

    I just started reading your blogs. It is very nice and simple.

    I saw your recommendation for HDFC hybrid… i found canara robeco hybrid and mirae hybrid also have given very
    stable return and have been there for long term. Is there any reason to avoid them.

    Also could you pl post best debt funds to invest.

    1. Dear Srikrishnan,
      Thanks for your kind words. Regarding the funds, they may be good and consistently generating the Index. However, it does not mean I have to recommend all. Hence, I have chosen HDFC.

  4. Normally u say for the creation of wealth we need to hold the investment for long term but this may be true with some companies & not for all the companies. U only point at those stocks with upward trend & many well known & good stocks which I don’t want to name them haven’t fetched any returns even kept for
    a long time. This has happened for me & just I didn’t sell my shares bcoz I was advised by a financial consultant to hold few of my shares which he only suggested, for a long time which gives good returns. But incurred heavy loss & now at any cost I don’t want to invest. It’s just a market gimmick by the companies & we ordinary people fall prey

    1. Dear Sandhya,
      I am not an expert in direct stocks and hence my advice is to own the whole market rather than few stocks and risk my investment. Invest in Index and do the asset allocation between debt and equity. I don’t know who is the next Infy or Tata. Hence, I want to hold the whole Index.

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