Wise Wealth Advisors

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

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Some thoughts

Posted by Muthu on September 22, 2018

It’s more than a month since I wrote my last piece. I try to write to you twice a month. Since good advice seldom change, sometimes I run out of ideas to write. What I’ve been doing all along is to keep conveying the same thing again and again in different words and examples. Good advice is repetitive and boring. But the rewards are exciting.

First some good news. SEBI has reduced the cost of investing in mutual funds. If cost goes down, your returns go up. This is the second such cost cutting in the last few months. Though it reduces our income, in the long run, what is good for you is definitely good for us as well. This change negatively affects those advisors who have been selling NFOs (New Fund Offer) and keep churning the portfolio to earn more commissions. As you are aware, we never ask you to invest in NFOs and rarely make changes to portfolio. As Warren Buffett says, integrity is the safest way to do business.

Markets have done horribly this year. Not only equity even debt has done very poorly. So be it equity or balanced or MIPs, all have performed negatively. Though I can give many reasons, what is important to note is this is the very nature of markets. It never progress linearly. Long term returns are made up years of high returns, low returns, no returns and negative returns. Last year was a year of high returns. This year is the year of negative returns.

Returns from mutual funds (mark to market products) are always lumpy. What matters to us is long term returns and not each year returns. There is nothing we can do to remove the volatility or lumpiness. This is the way market functions. You are rewarded with good long term returns only if you can accept and maintain calm during such volatile periods.

One advice I can give you this year is not to look at your portfolio frequently. We are all emotional creatures and negative returns triggers fear and create an impulse to quit. I’ll share each one of your portfolio in April 2019 along with my review. Though you all have online login facility, I would strongly suggest not looking at your portfolio. In bad times, we think good times would never come. In good times, we think it would last forever. The reality is market is cyclical. By going through multiple cycles, we get good long term returns which market provides us.

In a growing economy like India, progress is permanent and set backs are temporary. Don’t miss long term progress by getting bogged down with temporary setbacks.

Don’t look at portfolio and stay the course.

All would be well.

5 Responses to “Some thoughts”

  1. Nithin lakshmanan said

    Bravo muthu sir

    Sent from my iPhone

    >

  2. Harsh said

    Thanks! How to subscribe to your portfolio services?

  3. Mukesh Chothani said

    Alwyes follow your thoughts… & Advise..Nice way to express your worry.. After reading your stuff every one should introspective…

  4. kanakjain said

    Beautifully written and expressed 👌👍👍👍🙏

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