10% > 15%, if sized well

Everyone wants to make the most of their investments. We all aspire to pick the next multi-bagger stock or invest in a thematic fund that will provide the highest possible returns. Often, we hear friends and relatives asking for investment recommendations, adding a side note that they are willing to take risks but want the maximum returns, especially after witnessing strong past market performance. Investment returns ≠ Investor returns Over the long term, equity markets have delivered reasonably good returns. In fact, many equity mutual fund schemes with over 20 years of history have generated superior results. Yet, only a few investors consistently achieve similar returns on their total investment. Why is that? To understand this, let's delve into two interconnected concepts - volatility and sizing. While the equity market has given reasonable returns on average, it has rarely generated the average return every year. As a result, very few investors remain invested to fully benefit from market movements. This makes volatility a crucial factor