Sunday, February 13, 2011

Indian mutual funds, blue chip stocks
‘It is safe to invest through mutual funds’ is what the mutual fund managers will have you believe. If you believe them and hand over your money they will invest your money in shares, bonds or other securities. But that does not guarantee you a profitable return. If you do not get a handsome return on your investment why should you invest in mutual fund schemes?
Stock based equity schemes that do well can even out do the Sensex but the harsh ground reality is that most of the mutual fund schemes have underperformed their bench marks. It simply means that when compared to the Sensex the mutual fund companies have cut a sorry figure.
On the other hand so many equity stocks in the stock market have given far better returns than the best mutual fund companies.
Selecting stocks is not so hard provided you are willing to put in the effort. But then there is a way out for those who feel it is beyond them. All you need to do is to open a de-mat account and start investing regularly in the stock market by buying a scrip every month based on the advice of an expert. In a year’s time you will have a diversified portfolio of potential blue chip stocks. Those stocks that you purchased in the first few months would have already started gaining in value. What you hold may be one and a half times or double the value of what you invested. Now you can sell 50% of the profitable ones and buy more of another potential blue chip stock. Your profits and regular investment will see to it that your investment is broad based and instant liquidity is an option to mitigate losses if any. Well, shall we listen to what a passive investor has to say about the benefits of long term investment and its benefits?
 It an amazing story of how an investment of 15000 can actually grow to 11,00, 000 in less than ten years. The investor did nothing after investing in the stock but it is likely that he invested in similar potential multi baggers stock which was cheap then but after 10 years has grown in outstanding fashion. Click here and see for yourself.
And what do you do when instead of growth there is a fall in price? Well, you do nothing and stay invested, the stock market scenario is such that after correction the prices of performing companies will start to soar again. But what happens is a lot of people panic and liquidate their stocks and approach the mutual fund managers and leave it in their 'expert' hands with disastrous consequences.

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