From an investment perspective i always believe Direct stock investment is the best considering the returns you might get, but that is not a easy job or you will learn it quick time, you need to spend lot of time learning it and also never do a Direct stock investment if your portfolio is not beating Index returns or even a MF returns. So people's first choice if they dont understand equity investment is to put it in Mutual funds, but you should also know if your investments are providing better returns than index or in worst cast than debt instruments.
Since i started my first investment in Dec 1999, its almost 20 years and i know the track history of the nifty/sensex and many of the companies how it has performed in this 20 years.
First time Nifty touched 6000 in Jan 2008 and first time we hit 12000 in May 2019. So Nifty has doubled only in almost 12 years which gives a return of 6% as opposed to a minimum expectation of 12% from equity. Even if you look at a debt product like PPF it would have earned you a 8% interest with interest being tax free.
Now Does that mean that the MF investment has been wrong ?? Not at all - equity as an asset class is really the only sensible way to beat inflation in a country like India and MF is a good vehicle for this.
Also, though Nifty returns are only 6% annually, most of us invested in well managed active funds and those returns are well above the 12% to 20% range in the long run.
As they say, past performance is not a guarantee for future performances, if you look at the last 3 year or even 5 year performance of some of the funds the investors should be worrying abt it because it might hit your financial goals, there are only handful of funds which has beat the index returns in the last 3 years.or even 5 years. Take some well known funds HDFC top 100, HDFC equity, AB frontline equity, icici pru discovery all are struggling to beat the index returns for the last 5 years. So its better to review your MF porfolio and understand why these funds are not performing and change the portfolio accordingly.
Bottom line - MF investments are good for your financial life but you need to do these by being more aware of it as compared to before. The old method of deciding on a SIP amount and letting it be in the auto mode will not work any more.
