Let us again look at a fundamental and common sense way of building wealth, something which holds the key to powering your NetWorth.
It is not about the next multi-bagger stock, the hottest IPO, the best mutual fund or ETF, nor gold, oil or silver.
Yet, it is not a secret. As I call it, it is the no secret couple that can get your networth to soar.
See this chart.
Over the past few weeks, I have been working to understand the experience in buying various financial products – from a simple savings bank account to a mutual fund, insurance, ULIP, post office schemes, real estate and stocks.
I have had some experiences by myself. I have heard from my friends, family and colleagues too.
Some have had harrowing experiences, almost like an ordeal. Most experiences though were a mixed bag – different for different products.
But today I want to listen to your voice.
What has been your experience? The good, the bad and the ugly, all of it.
And there is a purpose behind it.
We got to make financial decisions better and products simpler, faster, smoother and convenient. Your answers will lead to understanding to build the change that we all want.
“Have you seen the movie Kai po che?” Vijay suddenly threw this question at me. We had just finished seeing another movie and were driving back home.
“Yes, I have. It was on TV a few weeks ago.” I replied casually.
“Did you like it?” he asked.
“Yes, I did. A lot.”
“Do you know it is based on Chetan Bhagat’s book 3 mistakes of my life?” he continued.
“Oh! I didn’t know that. I haven’t read the book, in fact, none of Chetan Bhagat’s books.” I said with a tone mixed of curiosity and surprise.
“Even I haven’t read it. I got the information from one of the reviews of the movie,” said the movie buff with a twinkle in his eyes. I smiled.
There was a short pause.
I got thinking. I turned to Vijay, who was driving, and asked, “What about the 3 investment mistakes of your life?”
No one wants to buy index funds
The concept of Index funds has not worked in India, at least not so far. They are super hit in countries like the USA but not in India. Vanguard in the USA, the largest mutual fund company, has all its products as index funds.
Further read: Founder of Vanguard, John Bogle’s 8 Rules to build your mutual fund portfolio
Less than 1% of the overall investments in equity mutual funds in India are in index funds. That says it all.
The one word that would come to anybody’s mind who is picking mutual funds is ‘performance‘, which again, for index funds, is nothing to write home about.
There are several ‘other funds‘ that have delivered much better returns. And is that not what we want – more returns?
The ‘other funds‘ are the ‘actively managed‘ funds compared to the ‘passively managed‘ index funds.
Having said that, there are some key benefits of using index funds as a part of a long-term portfolio. Let’s explore them here.
Well, he has done something that probably no one has ever done before.
No one will be able to convince you better than Baba Sehgal as to why you need a mutual fund.
He has made a hilarious rap video on mutual funds.
It will not only make you laugh and wonder but also ensure that you have mutual fund on your mind.
Absolutely must watch!
The doorbell rang, twice. I open the door and I see Sachin, my neighbour, standing there. He stared at me and then quickly walked into my house.
“Vipin, I read your posts on equity mutual funds and debt mutual funds. I also read about asset allocation and diversification.” Sachin said, as he took a seat.
“But you know, I still can’t figure out how to build my portfolio of debt and equity funds. It is all getting too confusing – choosing equity funds, then debt funds.
Can you tell me just ONE fund that can take care of both debt and equity investment?” I now understood the purpose of the sudden visit.
“Ah, my friend, I understand your pain. I guess even the mutual fund houses understand it too. So, they made something to solve exactly your problem.” I replied.
“You mean to say something like that actually exists. That’s great! What is it?”