Why mutual funds have no compounding benefit?!
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- เผยแพร่เมื่อ 8 ก.ย. 2024
- Mutual funds have no compounding benefit! Read more here
freefincal.com...
Compounding is not the 8th wonder of the world and Einstein never said that!
Part 2 is here
• How to understand mutu...
Finally, someone is making sense. I was breaking my head for the past few months wondering where is "Compound Interest" when there is no "Interest" at all in Mutual funds. Thank you very much!!
It was same with me :)
Same here!
Totally the same with me!! This video makes so much sense
Same here bro...from last 2 days i was thinking about this ...mutual fund is scam
Same but still I am thinking what if he is also confused and said something wrong😅
Started watching your videos at 9 PM tonight. It's midnight now. Found a jem in garbage of a content. Such an underrated channel you have. Thank you so so very much for putting some meaningful content out there. More power to you sir. Loads of love from capital.
Thank you
@@pattufreefincal Hi sir , I have a doubt.. Even though there is no guaranteed return of 22% every year.. The 10000 amount you have shown is grown to 1 lakh..? Isn't that a compounding ?.
@@muthukrish8284 The money grows. It doesn't compound.
@@arkshisha finally we need a large money either its grow or compounding. Kiya farq padta hai,
@@manishnagar4858 There's a difference. Compounding occurs when the investment will generate earnings from both its initial principal and the accumulated earnings from preceding periods. Compounding, therefore, differs from linear growth, where only the principal earns interest each period.
You are right Sir....If the market crashes during retirement time then all dreams of becoming financially free will collapse!! Example Negative 47% in 2008!!
That is why it is so important to diversify your portfolio.
Moreover you can look at how much time did it take for the market to recover after the 2008 recession and conclude for yourself.
So you can wait for 2 years in 2009 to 2010 market has broken the past high
After 12 years MF gave Rs. 1.19 lacs, whereas FD approx. in same period giving near about only Rs 22. 5 Thousand (@7%p.a.). Ultimately our aim is to make money & not compounding or returns.
True
He is trying to explain the concept of MF as we should have some knowledge before investing
True but what if the market goes down and you have 0 in account? In FD you will have the full money, right?
Hello sir,
I choose to differ from your point of view. MFs have power of compounding interest. The returns may be fluctuating but once you have bought units at a price you can sell them at higher price and that compounds over a period of time when you continuously buy units at a cheap price and sell higher.
He is posting this video because lot of sales guys misleading people to buy mutual funds by telling that mutual funds will give compound interest. To answer your question, You are actually doing trading... If we trade, then all products is having compounding benefits... But if you are stay invested then there is no compound interest.
@@sanveddhavale143 After certain period of time, we are calculating our returns growth. That doesn't mean that we have reached that place by getting compound interest.
Compound interest means interest should get interest. Let's say I am doing SIP of 10rs. for 10 years and let's say my total investment amount is 100. I might get 50rs. at the end of 10 years. Here did my interest get interest. No. First where is my capital? Here if we calculate our growth, it will be -10% (assuming I didn't calculate)... So, my annual compounded return is -10%.
Very well explained.. People don't seem to understand the purpose of this video Sir. It is not about suggesting if you should invest in mutual funds, it is just trying to educate us on what they represent and ensure we aren't fooled by misnomers. People who are familiar with instruments like FDs and know what compounding means might assume similar definition when used for mutual funds and fall into a trap.
Thank you!
Mutual funds have compounding (not compound interest) effect on daily basis
I am an mutual fund investor since long 25 years and also FD holder. So really I understood about power compounding worked over the period of time in mutual funds outstanding performance than FD and insurance plan
Nice to hear your feedback. There are very few people who persistently invest for 25 years in MF to see fruits. Your words are encouraging to others.
Atlast found channel for practical views on economic... thanks for ur knowledge sharing
I am not a financial advisor. I am just a retail investor. Let me ask you: What is the problem if a mutual fund doesn't have compounding effect? We may see a varying cagr every day. But, if we wait patiently till it reaches 12% and till our target amount is reached, what difference it makes if the journey is zig zag? Of course one cannot depend directly on volatile instruments for post retirement income. That is why we should have a target amount that is realistic. Once the target amount is comfortably reached, we should have the audacity to exit - should not be greedy. That's the only thing required. Isn't it?
"But, if we wait patiently till it reaches 12% and till our target amount is reached, what difference it makes if the journey is zig zag"
You are assuming you will get that eventually! Therein lies the mistake. You can get any return from +ve and -ve. Which is why the zig zag matters. Hope is not a strategy. Good luck!
@@pattufreefincal
I have been investing in SBI Bluechip Fund since 2018 and even after this month's big fall, it is still giving me 13+ % of IRR. Calculation shown is correct as I did that using Excel and several calculators. Are you saying that if I sell it now, I won't get this gain?
I am not for any kind of argument with people like you. But, honestly I didn't understand your point regarding compounding. What I want is a growth for my investment whether it is compounding year after year or not.
@@SambathikaChinthakal How do you know you will get the same return in future? Who gave you this guarantee? I also want growth for my money but I respect it enouth to not invest on the basis of hope.
@@SambathikaChinthakal The point Sir is trying to make is there is no guarantee of returns. No MF will give you in writing about 12-13 % FUTURE returns. They will just take point to point NAV values from PAST, put in formula and show 12-13% (which has luckily come)
Absolutely right!
In fact, if you observe, the sales / marketing experts will show the returns from a "backward calculation" based comparison only being able to present a percentage return only after it happened. But, you will never hear or see them what the growth can be after 10yrs from now, because there can be no formulae for the future, is what I think.
liked ur video to help u with TH-cam algorithm. BTW why did u assume interest rates needs to be constant for compounding?
So basically CAGR is the report card of the mutual fund and not the future growth guarantee. All we actually do in Mutual funds is trust the AMC and the fund managers looking at their past performance and give them time such that our money grows. But no one can actually predict how much money you'll get as a return.
Hi Professor, I have been a regular follower of your blogs and videos for a long time now. I think this video is my favourite among them. Thanks for calling out this compounding nonsense and making clear that it is just retro fitting of CI formula, for our understanding and comparison with other products. I always had a tough time explaining it to people, now I will link them to this video! Thank you!
Thank you
So there is no compounding benefits as Mr. Buffett calls it?
I just stumbled upon your videos. Subscribed to you. Must say you are really passionate about teaching. God bless. Just an advice, please drink water in between to keep yourself hydrated. Thank you. :)
U r correct, many people says compounding effect in mutual funds, but here in mutual funds works only on our investment , it doesn't know how much already grown.
Hi Sir its a great to Hear You and Appreciate for Educating, i agree with you about the verdict "Power of Compounding" kudos
thank you
Freefincal=real financial knowledge (no bullshit) thanks for d video pattu sir🙏
Those who understand what is being said will be aware and design their portfolio accordingly to manage the risk in an effective manner which will lead to optimised return and have a comfortable journey to reach their goals.
'samajhdaar ko Ishaar kafi hain'
Thanks, Chandan
good explanation. Still large caps in long term delivers a better money to retail investors.
Mutual Funds invest in equity and debt. The debt has compounding effect. So there is no point questioning that. Now with respect to investment in equities, any growth in equity is fundamentally a function of a company's cash flow, cost of capital and growth rate. What is this growth rate? It is a function of ROE and Retention Ratio. The companies grow by re-investing their earnings also called retained earnings. That is current profits are used to grow the profits. I feel this is compounding. Without compounding nothing can grow. Valuation of Every market product (even futures and options) are based on compounding models (discrete or continuous). There may be other consideration that traders take in like momentum and volume but if you are an investor then compounding happens. My humble submission please.
True
He is just saying compounding will not work for market linked products, did he ever mentioned that Debt funds also doesn't have compounding effect?
@@kmbala555yes he did
Thank you so much for bringing light into the illilusive understanding of Anualized vs Anual return. You made this video crystal.
Excellent explanation.
Thank you sir
Pattu sir. Please make a video/article on how an investor should reach an Equity:Debt asset allocation of 60:40 if most of his/her investments is in debt already (almost 90% in debt). Especially for investors between 35 to 40 age group. I understand that from your rebalancing articles you mentioned that in such scenarios, the only option is to aggressively invest in equity without any rebalance. But wanted to have your detailed opinion on this. Are there any other alternatives which you can suggest. I think this will surely help many investors. Please make a video/article on this. Thank you sir
Great video Pattu sir. Eye-opening video. Sadly many financial influencers are still using compounding word for Mutual funds which misguides a novice investor.
Doesn't matter if i lose money while investing now. At least now i understand how its happening! Thanks for sharing Professor!
Superb analysis Pattu. No wonder there is a nexus between the AMCs, Distributors and other players who project annualised returns as an equivalent of the power of compounding. I wonder what is SEBI (Society for Executives of Bureaucratic India) doing about this. As usual, they sit ducks with their Guaranteed Returns (Salary of the Central Government) until some catastrophe happens.
There might not be compounding effect per se but benefits are reaped in terms of increase in NAV value.
When nav is low - invest as much as possible and when nav is high - invest as low as possible. This is the mantra for mutual funds to gain highest gains. May be 11- 12%...
Very well cleared the myth. Well explained.
thank you
Lol Mr Rajesh you should not be blindly following this Pattu.. pls get the facts checked
We believe everything that is told by some so called experts and never use our brain but sir you are different and bring the right perspective.
Once again really appreciate your efforts for educating us.
Please continue the same
High respect and regards.
Thank you
Thanks Sir.
Pattu sir. You are a legend. Even premier B-Schools Profs are not teaching this.
You are correct sir it's annualized return at the end. But after the long term MF gives the effect of compounding , (at the long end of waiting) and gives big money(assuming positive fluctuation when we come out) long-term inverters could take advantage
😂 Long time inverters
The video in its bare essence may be true, but it is massively wrong when you consider any real world scenario. Every thing with a factor of growth/decay associated with it does follow a natural rate of growth/depreciation. Eular's famous constant e is the result of this spectacular observation. Any system tends to a natural order of growth that is some arbitrary multiple of the natural rate of growth, e. The rate may fluctuate over short durations, but it ultimately tends to an exponential curve. That is true for a machine that undergoes depreciation over the years. For the first few years it may show 0 depreciation, but over a period of 30 years it does tend to a value close to zero, and if you plot the decay curve it does mimic a decay exponential curve with some standard deviation. Look at the long term graph of any economy and you will find that the it mimics an exponential graph. Those huge fluctuations that you point out, actually smooth out as you zoom out on to the long term graph and what you are left with, is exponential graph. When we say CAGR, what we are doing mathematically is finding the ideal exponential curve that best resembles that graph. And more often than not, the actual graph does fall within a certain standard tracking error of the exponential curve.
When we invest in mutual funds, we are basically investing in the economy of the country. Now on Y-o-Y basis, the GDP may vary, but over a long period of say 30 years, that gdp follows an approximate growth curve of 8%. And since you are investing in the economy, with an added factor of inflation of 7%, your annual growth rate over a long period tends to be around 15%. While that may not be guaranteed in the short term, barring catastrophes like world war, Zombie apocalype and armageddon, your growth rate of 15% over long period is pretty much guaranteed.
Just becuase you have an iota of truth to your video, clickbaiting less math savvy investors into shying away from mutual funds is dishonest and decadent on your part. Next time try for some sanity
wow.... well said
saradendu karmakar Where can I read more things that you write?
Well Said Sir ... Would like to read more stuff you write, or maybe you have a TH-cam Channel ?
Short/long term is relative, so it varies person to person.
He didn't ask you to stay away from mutual funds... He is explaining what is CAGR.. that's it.
I loved the way u explained the concept. All these years i was misguided by online videos. Its true we can not assume the amount we gonna get after 20yrs or so in mf with the current CAGR that fund is offering.
Part 2 is here th-cam.com/video/rSsYEyS9kK4/w-d-xo.html
"Compounding is the 8th wonder of the world" Einstein never said this!! Another myth propagated by sales guys
Great. Another big misconception corrected that Einstein never said this..Thanks.. Great video.
Great information sir..
@@ArjunSingh1988 I will write about this
Everyone knows that there is no fixed guaranteed return...and most investors don't check their pf constantly so the annualized return is a helpful measure
If company provides dividend and you know direct and regular growth and which is depends on the NAV of the respective fund....Market investments subjected to market risks... Depends on market trends.... Example... Land line to mobile...
?
Mann.. Where have you been all these years. Luvvd your videos. Samma ❤️
I feel annualised return should be renamed to average annualised returns. Hope AMFI or SEBI mandates this proper TOA.
Thank you so much Respected Sir for such an Amazing Explanation..... I am watching your videos From Assam
Well common man is not bothered about this as long as he makes decent profit after invested for long period.what u said is also applicable for real estate,gold,shares etc.sometime price will go up and sometime it will come down.but in long run overall returns will be better than FD
Very true
First lets all agree. Mutual Fund returns can be calculated by seeing the Past data and we cannot project or expect the returns that has given in the past. As in FD you get the fixed returns and guaranteed.
Does FD returns takes care of inflation? Its big NO.
Does FD gives better returns over period of time? its big NO.
Does FD gives tax benefit ? its big NO. (Should have taken example as PPF)
Does FD participates in india growth story? its big NO.
So,
Mutual funds have market risk, that does not necessarily mean you will end up zero capital.
Last one year most of the Mutual fund returns have given negative returns or small positive.
It is advisable to do SIPs which will buy more NAV units when market is down and buy less NAV units when market is going up.
So Mutual funds are safe investment as long as you are not worried about negative to postitve or positive to negative fluctuations.
My financial advice:
Open FD as Emergency instrument.
Open MF for Wealth creation.
and for compounding benefits?
Wow what a clarity., crazy marketing guys . Thanks Sir 👍
Your videos are so informative, Sir! Thank you!!!
Thank you
Conceptually all over the place ..... There is always the compounding effect. What you are talking about is that Mutual funds return is uncertain...it might be 2% or 200% at the end of 10 years...but it does have compounding effect for every year's return...whatever it might be...
maheedhar kaki very true. It’s not only the profits that are compounded; losses are compounded too :)
Stock markets are volatile but NIFTY has given 12% CAGR since inception which is much better than FDs. Higher return and higher volatility/risk always go hand in hand.
Let's imagine a scenario, tha I'm investing in one equity fund with 100rs. After 10 years due to market crash I'm getting same 100rs. My question is where is my interest for my initial principal? Then where is my interest to the interest of my principal for 10 years?
Very nicely explained! All the dislikes are from distributers i guess !
This is the life changing video for investors
But the point is that for a longer horizon invest in mutual funds..instead of annualised or annual..simply calculate total return
Sir,
I know that "Compounding power" is not there in MFs.
So what...?
You get only 7% in FD & we get @ 18%.
I am an equity investor and like the volatility and take advantage of it to increase my stake.
Those of my friends are still skeptical and getting @ 7%.
Thanking you.
As long as we agree that there is no compounding there is no disagreement! I also have got that "18%"
@@pattufreefincal
Thank you.
Thats why we have the high and low risk buckets. So that a minimal subsistence interest is always generated despite the fluctuations
So where we can find compounding interest
Could u tell please
Exactly, so you need to take negative return in mind if you want to be there for long term.
I agree that MF won’t be a compounding effect. But here we owned a asset or piece of a company which is valued x now and may grow to x+y after say 10 years. After 10 years we can calculate the return generated by this asset and arrive at some % compounded annually that is our CAGR. If it is sip we need to calculate the XIRR to compare interests over a period of time.
Agree, thanx for giving words to the flaw of mutual fund. Knowed something was not right the way MF are explained.
Thank you very much for making the very useful video sir.. i was so blunder with so much compounding.
Thanks for saying the truth. I was wondering about power compounding...I don't see much benefits in Mutual funds ...I am investing from last year..money hasn't grown at all....My FD would have earned better return.
As said in 15 years the stock will grow by a lot. And as cumulative the returns will be higher than FD. Remember due to inflation is currently more than 6% , FD will be not much beneficial in longterm
@@argo3907 that's all an expectation. Stock prices dont go up due to Inflation as businesses suffer.
Bank FD are great and safe ways for common citizens. Investing a little in stock markets is okay.
Most finnance influencers fooling innocent people saying that stock markets will give great returns will guarantee you nothing. They will only say inflation is 7 percent and bank interest is 5 percent and fool you.
Please make a video on smallcase as well. It seems to have a lot of good features and is misleading to the investors as well
Which Bank is offering 10% flat rate? Most offer 5% to 7%
That was an example
Missing the forest for the trees
by his example, it is implied that the 10% rate is RECURRING and not FLAT.
I think this is the fastest time I have subscribed to ANY channel. :)
So in short to calculate the returns for mutual funds would be the ending value/beginning value over the numbers of years invested, would that be right?
Thanks!
Mutual fund returns cannot be predicted...that is the point that most people miss...there is no possible way in which you can make a definitive statement about how much your invested amount would grow..u have to have a certain degree of trust in the process followed by the fund
I was actually wondering why Warren Buffett has been quoting Power of Compounding throughout his Vlogs and why advisors have been pushing to invest for a long term. Going by Maths, I am further confused. Let me ask a simple question?
Eg. SBI SmallCap is quoting 23% CAGR over last 20 years, does that mean that if ₹100 was invested, today's price of the fund is equivalent of ₹100 getting annualised rate of 23% for 20years??? Does that mean the value of investment is say ₹100000, for this ₹100 invested 20 years ago??? I haven't seen markets growing above 70%-80% and say 2nd year it's growing at -70%, then after 2 years ₹100 becomes ₹100 value for the fund. To get 23% CAGR, are you saying that markets have grown at 23% of previous years value for 20years or 23% of the original investment, because if it case 2, then marketers should be screaming 50% growth in 2 years rather than 23%cagr??? What I don't clearly understand is ₹ 1 lac will become ₹1.7 lacs in 2 years @23% and is it for real that Mutual Funds can generate such CAGR, where ₹100 becomes ₹5,000 in 20 years???
Very deep .
I got this atually by watching for 5 times.
So please tell where we should Invest. And how to invest
Sir I have a question to you, FD has 8 to 9 % return and it is true that it can compounded what you have said. But if investors wants 15 % ret then what is the correct place to invest? U know why I am referring this 15%, because most of Indian company can grow by what they’re are taking fund from banks and bank borrow this fund from us in term of FD so it is my estimation in every point of lending money it has value addition of money so I think in stock market you will see this value added return . Please reply if you have more insight on it. Thank you 💐
15% will require active management in stocks. Simply buying funds will not help
Sir very nice same question I had asked prudent guy conducted seminar he told after 5 yrs the return starts for long term it will be nice he promoted
In PPF also the interest rates keep fluctuating evey quarter.
So will you not call it compounding?
But at least it is certain for an year or atleast for a quarter and interest is deposited in our account, wherein there is no interest deposited in case of mutual funds
@@titan3537 clear your concept brother
@@sumitgupta516 Compound interest is very simple... On every year end, I will get some amount as interest, on next year, I'll get interest for my principal and for previous year's interest. In PPF, let's says I have invested 100 last year and I'll get 110 (assume 10% interest)... So next year it will be 121 (assume same 10%). But in case of mutual funds, the profits are getting interest for us... So it is not providing compound interest.
so what, yes they represent it in wrong way but I get far more returns in mf than fd rd even in post office. I'm happy with my fund performance.
Can you please elaborate on how your funds have given you return?
@@sorz26 large cap blue chip of any bank will perform good. Sit tight dont look. They are made up of biggest companies of india tcs asian bajaj group etc etc thats why they perform. Dont look for short term gains. Markets always recover. Jisne 2007 ke top pe liya hoga, wo bhi abhi profits mein he hoga. :-)
@@kroshellofficial2784 ek video dekha thaa jahan 40yrs tak every month agar 500 daaloge toh average percentage 15 bhi consider kare toh corpus around 1cr ayega aise bataya thaa. Is this possible?
Great said
What is the formula to calculate SIP return ? means amount invested every time period and same amount
I will make a video about this
Await a video on this!
Isnt XIRR a better way to calculate for SIP Mutual funds return? Also, keen in hearing youe views on booking profits and the timing of it. Reason why i ask is because there's no compounding effect in MFS, perhaps makes sense to book profit? Thanks
Pl see articles on goal based portfli managhment on the site
In summary,
1. returns on mutual funds are represented as annualized returns.
2. And due to market fluctuations, there are no guaranteed returns at the end of each year.
3. And worser, you can get negative returns if the markets perform badly for an extended period of time.
But how about a title like, how to calculate returns on mutual funds. Or risks in mutual funds.
The title is misleading and fear mongering 👎
It is meant to create fear. Try creatng some content and then you would know more about setting titles. Until then, I wont take your last comment seriously. Nice summary though. Most people are not capable of this. With a title such as what you suggested, only a handful like you would have clicked on the video!
When you check the developed nations, interest rates in bank deposit is below 1%. There are countries with negative interest rates also. Which means, it will cost money to deposit in bank. Every year we see that the interest rates are going down in India. I think, practical inflation goes a long way above FD interest rates. So, we are almost losing money by saving money in the bank. Stock market or mutual funds are not the only option, an investment in your friend's business is also an investment. Anyway, investment is going to be the only way we have a chance of at least keeping our money.
He didn't ask us to stay away from mutual funds...
@@kmbala555 Yes. I just mentioned why bank deposits are also not making you a significant profit. It is a loss, if you consider inflation now. That is the reason why many people western country are investing in other developing countries.
Thanks for clarification. This helped.
Thank you sir.
How about in case of SIP ?
What you have shown is for lumpsum.
Becz people always recommend SIP when it comes to mutual fund.
Sip solves the problem of investing at wrong time. Suppose you invest when the stock price is high then you will be in loss instead invest as a sip , where the average will be less than lumpsome. If lumpsome is invested when market is low you will more profit than sip. But we can't time market so sip is a safer choice
SIP is a marketing gimmick.
Sir,You have cleared most of my doubts.
Thanks for clearification
Pattu sir superb video.✌️👍. I thought you would also briefly introduce folks about XIRR. Probably as a seperate video i suppose.
Thank you,. I have already done this. See my video today for a link
Thanks for sharing.... valuable insights
instead of annualized return , can one accept , mean return of ,say, past 10 years with standard deviation "x" along with the caveat , past returns are not indicative of future !!
Can you please explain the dividend part by MFs and Stocks ?? And how is that invested back when we take the "growth" plan .
Thanks..!!!
Yes will do
I agree with you completely. I had similar idea. In that case "dividend reinvestment" can be called as compounding. But then we have problem with tax deduction on every dividend.
Ok i got your point, psychology is a very important point to consider.
Didn't understand
"Use your brain" and do what, invest in a fixed rate instrument at 2% with 20 + years left until retirement - not even keeping up with inflation? The U.S. stock market Destroys that over any 20 year time frame you want to pick. Would you feel better if the "sales guy" says there has been a 550% total return in the last 20 years as apposed to 10% compounded annualized return? Either way, in the U.S., a prospectus has to be distributed with the mutual fund investment that shows the actual returns for at least the last 10 calendar years and states that past performance is no guarantee of future returns - so there is no misleading there. If you have a bad "sales guy" telling you that you're gonna get consistent compounding interest every year, that is not the fault of the mutual fund! Lastly there are many mutual funds that pay out distributions every year as part of the returns that, when reinvested, also get returns = compounding returns! IF YOU WANT TO INFORM, INFORM WITH THE WHOLE STORY.
He is from India and here most Fixed rate instruments yield 6-7% annually. The interest rate has reduced recently but used to be >7% at the time he published this video.
DEAR MR.PATTU ...I AGREE FULLY & FINANCIAL ANLYSIS. I AM A SR.CITIZEN & HAVE OCEAN OF KNOWLEDGE ON VARIOUS FIN.MATTERS. I AM ONE OF YOUR CATEGORY.
I GOT MYSELF INITIATED INTO M.F JUST FEW YEARS BACK through a part.time investor . I got into M.F. & MORE DISTURBINGLY "SIP" TERMINOLOGY . NOW THE LIC SALES GUYS ALSO USE THE WORD " SIPS" AGAINST LIC'S INSTALMENT PREMIUM .
I SEE YOUR PRESENTING & FUNDS JOURNEY AS A OERFECT ANALYSIS..
The present unimigative expressions like SIPS have taken a negated till on investors who get excited over realistic returns.
Your compounding measurings is on the DOT .Do keep connected.
Let the Present Genres of mis-advice stand revisited,Sir.Thanks for the clear visionary emancipation of instalment journeys .
Thank you Pattu sir for a beautiful video
Sir v well explained. V good video. I salute you everyday you come with good & true things. Thanks.
Please suggest a bank which gives 22% interest per year on FD... if MF is bad idea..
You don't get 22 percent annually. Please watch the video again. Some years, you may get -8% (minus eight). 2018 has already taught us that.
Where does he say MF is a bad idea? All he has done is explained that compounding is not done in MF but its a journey of your money and at the end of your tenure you calculate from start to end the growth/decline of your investment and average out to find out if money has grown or reduced and at what % rate.
The only compounding effect one would see with equities is reinvesting Dividends paid and Dividends Raised YOY!
Not all stocks grow despite dividends. Dividend investment may have worked for certain companies like Coca cola because the share prices were always reasonable and the stocks split many times in the past.
With MRF or TCS you cant do it. These growth stocks dont pay high dividends. They are more for growth with low dividend. MRF is quite bad in that way. TCS is okay specially if you are buying TCS stocks every year you can do dividend investing after few years.
ITC and BPCL are good examples of dividend investing. The stock prices are reasonable and the dividends are good. But if the stock prices dont move up in the longer run the dividends will still be bad. You will have more stocks of them and the dividends will be less due to the stock prices not going up.
You will get great dividends only when the stock prices go up and the stock splits making it easy to reinvest.
So is there any investment scheme which has fixed 15% interest. If No all financial instrument which remain same has Fixed deposit
Thank you Lattu sir.
Sir I appreciate your efforts, I saw your so many videos..
You’re telling about Mutual Found are fooling you & blaa blaa bla..
Request you give us solution, if MF is problematic so tell us where we can invest our money???
He too invests in MFs only. He is only telling the facts not telling don't invest
How about debt mutual funds e.g. liquid funds which more or less has the same annual return?
It's a very very true and he is very clear
If there is any misleading SEBI will take action. You don't worry. That's why they say mutual fund is subject to market risk
lol! Mutual funds are first subject to ignorance risks and then market risks
@@pattufreefincal lol
this is the video which i was looking for
Very nicely explained. Keep it up.
thank you, eye opener 👍👍
Okay.. understood what you said. But having understood this, we also need to think about investment. So do we put all our saving in FD and PPF? And since the inflation is almost equivalent to the rate of interest these FD's and PPF's provide, its not worth putting our money there either.
Did I anywhere say not to invest in equity?
@@pattufreefincal No, you did not. But I started thinking a bit negatively about MFs after watching this. I am new to this field, learning :)
@@Andy-kk4xc dont worry and invest. Just learn to manage risk well
Deiveme _/\_. Respect from Germany.
U are right, but the agents have their families to feed. Mutual funds companies have their employees to give out salaries. Investors have their money to grow. And India have the better economic growth as this companies, factories , sectors grow more.
Hats off you pattu sir