Every investment of us should have a solid reason and those reason need to be apprised at regular intervals(at least a month). Unfortunately We invest just because colleague/agent/shiny_advertisement said so. I say it from my own bitter experience. I have read one blog and felt the importance of Balanced funds and invested ~30000 in Sundaram Balanced Fund. Yes Balanced funds are good, but I did not ask Is it good for me? Real answer was It was not good for me as I had other fixed deposits to take care of market downturn. As my investment was not based on reason I got a meagre return of CAGR 6.72% in 8 years(I switched it to better fund and got good return in the last 4 months, otherwise this fund would have given only CAGR ~10%) As my investment was not based on reason I got a laundry list of investments. 4 months back, I wanted to consolidate my laundry list in that process switched dud funds like Sundaram Balanced and Sundaram Growth to Sundaram Select Midcap - DIRECT Growth and got *EXTRA* returns. I switched 35220 Rs from Sundaram Balanced fund to Sundaram Select Midcap DIRECT Growth ~ 4 months back, Now it is worth 47257 Rs, had I not switched it would have been worth only 40271 Rs i.e 7000Rs more in 4 months i.e 5% more per month or 60% more per annum. Had I switched it on July 9 2012(As soon as all my SIP investments had completed 1 year), it would be worth 56355Rs. Hey an opportunity loss of 19000 Rs in 2 years thanks to my inertia. Actionable stuff after reading this update: 1. Check if you have more than 5 mutual fund holdings, then you need to trim by switching. 2. Like Software Version control command like svn blame you blame your holdings to find the rational behind each of your holdings, reconsider as per todays situation and switch if necessary. Moral: Do not stick to DUD investments falsely hoping that What grows faster eventually falls faster too... It may not always be true with diversified mutual funds, even if it is true fall rate may be smaller than growth rate to give positive returns.
Posted on: Tue, 02 Sep 2014 06:09:57 +0000
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