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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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What happened when he forgot?

Posted by Muthu on August 14, 2017

My colleague Partha went to a client’s place last week.

The client while searching for something stumbled upon a very old investment he made and completely forgot about it.

In 1995, he has invested Rs.5000 in initial allotment of Reliance Vision Fund.

He wanted us to check the value.

When we checked the same on August 10th (NAV as on August 9th), the value was Rs.2,76,166.

His initial investment has multiplied by 55 times over 22 years. It works out to an annualised return of 20%.

He acknowledged that but for his forgetting, he would not have kept the investment this long.

He also said that after becoming our client and seeing an example from his own life, he is convinced about the benefit of holding equity for long term.

Reliance Vision Fund has been one of the average performers. In the last many years, it has never been a chart topper.

As we always say, as long as we avoid certain kind of funds and some fund houses, any diversified equity fund would do well over long term. What we avoid is more important than what we choose. All that is required to have 4 or 5 diversified equity funds in a portfolio.

Though we select good funds, that’s not our main job. We want to ensure that you hold equity funds for a minimum of 10 years and preferably couple of decades.

If only you can do that, I don’t see why you cannot be very wealthy.

Luckily for him, he forgot. He may even wonder why he invested only a small sum instead of committing few lakhs, which he was capable of even two decades ago.

You’ve heard this John Bogle’s quote from me many times. Please listen now for one more time.

“Stay the course. No matter what happens, stick to your program. I’ve said ‘stay the course’ a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you.”

2 Responses to “What happened when he forgot?”

  1. Advait Thakur said

    One of my client has a similar story.I am posting a link to his statement here.https://www.dropbox.com/s/6defvsju5z6p6tp/prima.jpg?dl=0 He invested in FI Prima Fund(Then it was Kothari Pioneer Prima Fund) & Rs.1000 grown by 18% CAGR .I hope my calculation is correct. He didn’t touch this probably because the investment was mere Rs.1000/- 🙂

  2. jitu said

    Exactly same thing happened with me when one day in march 2008 i discovered idbi tax nit bonds purchased by my father in 1996 lying unattended. when i enquired from my father i he expressed his inability about its details.then i made a detailed enquiry about those bonds and i came to know that those have been converted into principal tax saver mutual fund with investment of rs 10000/- with present value at that time rs 88000/-.i immediately encashed those units and actually realised that how 10000 can become 88000 which encouraged me to further delve deeper in to mf investing and voila ..i think i m progressing on right track being a long term investor in mf… infact articles like these further provides strength to muthu s suggestion and guidance to follow his rules
    thanks and kind regards

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