I have two questions. First, I want to know if someone invests in mutual funds for ten years, will the person be in profits? Second, why are some funds, like Mirae Asset Emerging Bluechip Fund, not accepting any lump-sum investments?
- Kavi
To the best of my knowledge, mutual funds can help you earn well. Although it doesn't require my assurance, I still feel that barring unforeseeable circumstances, in most normal circumstances, a 10-year regular SIP investment in equity mutual fund will not only help you make money but also have the potential to make you wealthy. And this is something that I can tell you with reasonable confidence.
However, increasing your contributions in line with your rising income as well as inflation also plays an important role. A 10-year disciplined investment, coupled with an annual increase in contributions, can potentially make you a wealthy person. This will hold true even in the case of an average performing fund.
Coming to your second question, many fund companies have stopped taking lump-sum investments, especially for some of their funds, which is indeed good for you. These AMCs believe that they cannot absorb a large amount of money because of the size of their funds and their market perception. Fund houses think that too much money in a brief time period will be a deterrent to the funds' performance, which eventually will translate into disappointment. So, it is good for you that AMCs are taking precautions.
This article was originally published on June 20, 2019.
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