A lot of kids I know have 3-4-5 year old SIPs. Some in the red, some in the black. However even those which are in the black are just marginally in the black.

When they see the statement it does not look good. Not good at all.

What can they do? It is tough. I can assure them things will be well, just hold on….but they are under tremendous pressure.

One of the kids without any parental pressure to withdraw just came and said…’Sir…..should I withdraw’.

I had nothing to say. Just said ‘Give it 5 years in a growth option’ – invest Rs. 1000 a month (continue investing…for 3 more years)…the total amount INVESTED would be Rs. 60,000.

If the sum accumulated is less than that, I WILL BEAR THE DIFFERENCE. She was stunned.

Largely it comes from the confidence of the business / economic cycle. She has chosen a good fund (so the fund manager risk is quite low). Not a very sensible thing to do, and I am not recommending it to anybody…however I have done this in the past for a few known people..and have never had to pay out 🙂 . Theoretically I could have a liability of Rs. 60,000 – assuming I have said this to about 10 people, the risk is Rs. 600,000….hmmmm will learn to live with that…while praying!

For all those kids who do not have any person giving a guarantee, relax, the markets will recover – the question is when, not whether. To get rich you need to invest in very volatile asset classes also. It is easy to say ‘I will invest only in debt instruments like PPF, ….understand  risk”

Getting rich, kids, is difficult, but not impossible…

 

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  1. P.V.R. Somanadha Sarma

    Good post. Sometimes I am also getting depressed seeing my mutual fund statement showing negative or marginal returns

  2. Hi Subra,
    You touched a chord today… It seems like you spoke to me and wrote this article.. I too have been investing in MFs for last 5 years of my professional life and when i reflect my portfolio, its between -5% to 2% and when i look at some of FDs i opened at 10.5% , atleast i made some money… Dont know which was smart thing to do and what would be smart thing to do now 🙁

  3. Eye Opener. All those who entered into equity to make quick bucks are seeing this day. People who just invested for years and years have made loads of money. People who have entered recently are in loss.

  4. This topic would be very close to millions….

    Few questions to ask yourself before investing:
    1. Time horizon for investment
    2. Amount of investment
    3. Overall national/global economic understanding
    4. Timing markets!

    1st two questions are very simple and pretty much everyone can answer it. 3rd question is a bit difficult but still 50% will manage to come up with a decent answer. 4th question is the toughest and pretty much 1-2% people may have a clue about this at all….

    Now if you are in those 1-2% people then you CAN become rich, HOW?
    Imagine, you ONLY invested in markets from 2003 to 2007 and back again in 2009 to late 2010, you can see significant growth in your investments, Isn’t it??? This is true for people across the world.

    How to get in that 1-2% people?
    – NOT easy at all
    – Will require efforts on your part
    – Need to have a very good risk management approach
    – NOT MARRY your investments and let them “GO” if they are not performing as per expectations

    Enough of talks, it is always said:
    – NO one can time the markets
    – You will never succeed
    – Its a foolish approach
    – pathetic

    But YET 1-2% can do it and make significant difference in their financial portfolio, Isn’t it?
    – They know what to look at
    – They know how to apply techniques
    – They find ways to use ANY market (BEAR/BULL) to their advantage
    – They can do excellent FUNDAMENTAL analysis

    Unfortunately, NO FINANCIAL ANALYST will tell you “how to do” any of the above things…. 🙁

    So is their anyway to find above things? especially if we are ready to take efforts and time to understand all this?
    YES, all you need it to keep looking…

    Click on the name and may be you will find some information helpful…. 🙂

  5. Benjamin Graham:

    “A suggestion I can make is that if you were sure that you could follow a dollar-averaging program, you could start [investing] right away. Dollar averaging is a method of investment under which you set aside regularly a fixed amount of money and invest it in common stocks generally, either in a single common stock or preferably in a group investment through investment-company shares. By investing the same amount of money at regular intervals – say, every three months, you get two advantages.

    One is that over the years your investment reflects the average market price rather than the high market levels – which is where you are likely to buy if you follow the crowd. Secondly, the arithmetic of dollar averaging gives you more shares at the lower prices than at the higher prices, so that your average cost is lower than the arithmetic average. If you are putting $1,000 in one kind of stock and the price is $10, you’d get 100 shares. If later it’s $20, you’d get 50 shares. You bought more stock at the $10 basis than at $20. Consequently your average price would be less than $15.”

  6. Subra sir, I asked this previously and am asking again:

    What about doing SIP on based of P/E. I heard the average p/e of NIFTY around 18 (read somewhere but not sure). So what about investing in SIP when NIFTY is below 18 p/e and go on., wait when p/e goes above 18 p/e., and wait… then withdraw partially above 20-22 p/e., withdraw fully above 25 p/e (think they call it bubble when NIFTY p/e is above 25 p/e).

    Is this fine???????

  7. @Praveen,

    There are many mutual funds now which allow you the same through Trigger facility. However, it can be applied to ETFs or Nifty based funds only since individual stock movements can be way different from Index movement.

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