Some time back, I received a fascinating letter from a mutual fund investor. This man has been investing regularly in a set of good funds and getting good returns. Yet he is very unhappy with his investments because of his misconceptions about how the basic arithmetic of fund investing works.
It's an interesting case to discuss because he seems to have combined all the common misconceptions about mutual funds and added them up to a mental model full of errors. This mental model can easily lead to poor investing decisions. The reason why I'm writing about it is that all these misconceptions are extremely common and this man's case is not at all uncommon.
Motilal Oswal MF launches an index fund focusing on capital market companies
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