1. In reality, equity mutual funds are a 5-yr+ long-term risk-taking market-linked investment, and not simple and straightforward with protection.
2. However, our obsession with capital protection is harmful for wealth creation, as it is not possible to put our money to use and protect it as well, because investment returns can come only when it is made to work.
3. If we can take risks in purchase of other movable and immovable assets, we can
have a similar approach to MF investments too, instead of seeking protection at all
times.
4. Any asset-building activity cannot be done without taking risks, and future
performance of financial assets is an unknown variable for all investors, with even best-managed businesses and well-thought out strategies misfiring.
5. Instead, we can just concentrate on avoiding risky investing mistakes like:
a) Having no asset allocation strategy,
b) Overweighting on high-risk funds,
c) Funds not matching our risk profile,
d) Investing beyond our net surplus, and
e) Assuming short-term returns as long-term returns during goal-setting.
2. However, our obsession with capital protection is harmful for wealth creation, as it is not possible to put our money to use and protect it as well, because investment returns can come only when it is made to work.
3. If we can take risks in purchase of other movable and immovable assets, we can
have a similar approach to MF investments too, instead of seeking protection at all
times.
4. Any asset-building activity cannot be done without taking risks, and future
performance of financial assets is an unknown variable for all investors, with even best-managed businesses and well-thought out strategies misfiring.
5. Instead, we can just concentrate on avoiding risky investing mistakes like:
a) Having no asset allocation strategy,
b) Overweighting on high-risk funds,
c) Funds not matching our risk profile,
d) Investing beyond our net surplus, and
e) Assuming short-term returns as long-term returns during goal-setting.