HYDERABAD: What would you do if the best-performing mutual funds that you invested in today does not remain the best one in the future? Would you feel like you made a mistake and start investing in the next top performing funds? This is the type of investment behaviour that personal finance experts disapprove of, and are warning Hyderabadis investing in high-risk funds not to indulge in. Their advice “remain invested with discipline”.
“Investments have a lot to do with our psychology,” says Vipul Shah, chief executive officer of Lakshya Financial Planner. “Assume that there are five funds today that are top performing and you purchase all those five funds and now it is in your portfolio. Next year you will see that the funds you invested into are not the top performing funds anymore, so you then decide to invest in the new top performing funds. Continuing that trend will leave you having lot of mutual fund schemes in your portfolio leaving you more exposed to market shocks,” he says.
“Also, your asset allocations will be a mess and you wouldn’t be able to manage and monitor your portfolio,” says Vipul. This is exactly what Madhav P, a former marine engineer who now works with an engineering firm at Madhapur did. “You save a lot while sailing as you cant spend money while on a ship. Back in 2009 I did make a few investments in mutual funds and stayed with those investments. In 2017, there were massive layoffs at my firm but it doesn’t bother me as I have got myself covered,” says Madhav.
“Hyderabadis hoping to invest in mutual funds and equities are at a little disadvantage compared to people in Mumbai and Delhi,” points out TV Ramana, an investment advisor based out of Hyderabad. “More and more people are trying to understand and invest in mutual funds now in Hyderabad. There are events and seminars being held everywhere in the city to help such people. But the problem is that most of these events are organised by banks, who are merely trying to sell a product. So most of them have limited understanding of markets and equities,” he added.