Often, many investors seek hot tips on stocks or look for multi-baggers as they believe it is the surest way to create wealth. It is like searching for health tips to get fitter. However, an honest answer to such searches is following a disciplined approach. But you will not get any takers if you tell this to people out there.
Many people like to follow a guru who gives tips on getting six pack abs in 10 days or investing in multi bagger stocks.
While people get several tips on identifying 100/200/1000 baggers on internet today, there is no way to validate such information. In most cases, people know about multi-baggers only after they become one. Once they become multi-bagger, the chance of repeating such a performance is limited.
Investors can overcome this challenge by investing in mutual funds to create wealth which is more easily available for research.
One of the oldest MF schemes in India, the UTI Mastershare has completed 35 years and has delivered 16.15% compounding returns. During this period, investors’ wealth has grown 190 times. Even if the fund matches the index returns in future, it would double wealth every 5 years. In the 40th year, the wealth will be 380 times. In the 45th year, it will be 760 times and in the 50th year, it will be 1520 times. In a life span of 50 years, investors’ wealth can grow by more than 1000 times.
But the most difficult part is ability to stay the course. Streetfood offers host of mouth-watering options like bhajiya, pani puri and so on. Also, when you sit with your family or friends, they insist you to eat such foods.
Similarly, investors will continue to receive hot stock tips, which have no track record or credibility. But remember there are mutual funds schemes which have delivered multi-bagger returns with track record of decades.
Investors should invest in 5-10 schemes with the help of their MFDs/RIAs and stay the course to create wealth.
It is very easy to invest in 5/10 of such schemes and stay the course. Here is what you can expect from mutual funds:
5 Years 2 Times
10 Years 4 Times
15 Years 8 Times
20 Years 16 Times
25 Years 32 Times
30 Years 64 Times
35 Years 128 Times
40 Years 256 times
45 Years 512 Times
50 Years 1024 Times
It is better to invest in mutual funds than following 'self-appointed' experts on social media with no proof of track record.
Remember this:
क्या वो नामुराद की खुदाई थी,
बंदगी में मेरा भला ना हुआ।
(If you pray to false god, your prayers will go unanswered)
Vijai Mantri is Chief Investment Strategist and Co-Promoter, JRL Money. The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.
