Is it Necessary to be Patient to Fetch Excellent Returns on Investment?
Many of the new investors have experienced the bad phase of mutual fund investment. But, there have been times when the market performed extremely well. Then why some of the investors couldn’t make a good income? We say due to lack of patience. It is said many a time by many financial experts that mutual fund investment needs time to generate good returns and high growth.
If you are not patient, it will be hard to earn multiple digit returns from the investment. Let us read a story to understand that what happens in most of the cases:
Just a few months back, one of our clients shared his experience of investment in mutual funds with us. He started his investment journey and parked Rs. 10,000 in a scheme. After 20 days, he noticed his capital amount reduced to Rs. 9,568, and due to the fear of losing the entire invested capital he withdrew his money.
This is what happens in most of the cases; many investors fail to fetch higher income in mutual funds because of such kinds of mistakes, and for them, investment becomes a not so worthy thing. But the fact is that you need to be patient because MF provides excellent returns when they get matured over a period of time.
There is a famous quote by Moliere, which goes like “ Trees that are slow to grow, bear the best fruit”, which depicts that if you want to get the best fruit, you need to wait for a long period of time until the tree gets matured enough to provide you with the fruits. The same fact goes with the best mutual funds investment, if you want to enjoy the best returns from the investment, then you need to be patient until the fund gets matured over a period of time. Thus, you should not do the mistake of quitting investment after such kind of experience in a very short span of time, rather stay invested and wait for the right time; your capital may boost up to double the value.
How Patient Should I Be?
It depends on the type of fruit you want! This means your investment objective determines the duration for which you should be patient to achieve your financial goal successfully. However, there are certain common investment objectives which are discussed below providing level of patience they require to generate the best returns:
- Retirement Plan : If you are planning for your happy retirement then it is quite obvious that you are not in requirement of money right now. That is why retirement plans consist of equity investment which is known for long-term capital appreciation. So, if you have invested in these kinds of plans then stay invested, and do not change your decision due to small fluctuations in the market trends. In the long run, it always ends up with excellent returns. Recently, Reliance Growth Fund created profits of Rs. 1 crore on the investment of just Rs. 1 lakh, but it took 21 years to achieve this success. Those who remained patient and invested in this scheme earned such a big corpus.
- Child’s Future Plan : The investors do not get a long period of time to achieve objectives like child’s higher education, daughter’s marriage, etc. Generally, people start investing at the age of around 25-30 years, and they are in requirement of money in next 10-15 years for such purposes. So, these plans are designed to attain the determined objectives in a time period of 10-15 years. Therefore, if you too have similar objectives to be achieved, you need to be patient for a duration of 10-15 years.
- Planning for Own House, Car, etc. : If you are investing in any plan with a target to achieve these kinds of objectives, your investment should have the capability to grow faster in less time period. These objectives are generally targeted to be achieved in a time duration of 7-10 years. So, you need not be patient for a very long time like the investors of the other plans do but stay invested for at least 5-7 years to earn good amount of returns which would help you achieve your desired goal.
However, in all the above cases, you must keep a close watch on your total investments so that you can make the required changes whenever you feel the need. There are various investment categories which aim at generating profits in a short-term period. They earn returns from debt instruments which take less time to make small profits. So if you can’t wait much, then the debt funds can help you earn short-term returns for current financial needs.
Therefore, you must know the category and purpose of your investments and accordingly wait for the right time to fetch the best returns. Don’t just have a false illusion, rather know the facts. Quitting investment based on a single fall is not a smart move, try to be patient. The best returns will be generated when the capital will grow over time. You can also start investing in the best schemes of various AMCs in India at our portal, i.e., MySIPonline.
- LTCG Tax Is Not As Negative As it Seems; Here’s Why?49714 min read Jan 01, 1970
- Sensex Plunges Over 1000 Points; Should You Buy or Hold Your Investments for Correction?50303 min read Jan 01, 1970
- Sensex Dives Nearly 840 Points: Things to Consider and Experts’ Take51643 min read Jan 01, 1970