When I saw the news today that Reliance Growth Fund has crossed Rs 1000/- NAV mark, I experienced both joy and sadness. It is really time to celebrate irrespective of whether you have invested in that fund or not, whether you made returns in that fund or not. It is time to celebrate because it proves that long term investing in equity mutual funds will get you better returns than any other asset class. Let me use this fund to tell you the difference between lump sum investment and SIP.
Why should you feel sad with such huge returns over the years? When you see this kind of return on paper, generally you wonder how satisfied that investor would be. There is a hidden fact in this data. How many investors made returns equal to the fund’s returns? Even if you do a check with the fund house, you would find only a handful of investors. Those who had been with the fund through its ups and downs are not super humans nor they did take a lot of efforts while amassing such a return. The only reason and a highly probable one is he/she would have ignored this investment or never bothered to check the status in between. This is the hard fact many fail to digest.
A lot of post-mortem could be done now and 101 reasons could be given to justify the performance of the scheme with credits that could go to the Fund Manager and his ability to pick stocks. But the reason for the success of any investor is always something that we need to keep an eye on !
This is not the one fund wonder but there are other schemes that have stood the test of time and delivered wonderful returns if not better.
Lump Sum Investment Story
| Lump sum | As on | 28-04-17 | ||
| Scheme | Launch Date | Amount invested | Current Value | CAGR % |
| Reliance Growth Fund | 06-10-95 | 100000 | 10037582 | 23.82% |
| HDFC Equity Fund | 30-12-94 | 100000 | 5627450 | 19.77% |
| Franklin Prima Plus | 29-09-94 | 100000 | 5289645 | 19.20% |
Let us also dwell further how SIP over the years would have helped in this funds.
| SIP | As on | 28-04-17 | ||||
| Scheme | Start Date | Amount per Month | No of Months | Total Amount invested | Current Value | CAGR % |
| Reliance Growth Fund | 31-10-95 | 1000 | 260 | 260000 | 6424392 | 22.32% |
| HDFC Equity Fund | 30-12-94 | 1000 | 269 | 269000 | 6098751 | 21.07% |
| Franklin Prima Plus | 30-09-94 | 1000 | 273 | 273000 | 5552526 | 20.15% |
As said earlier, though the fund has delivered many investors would not have made similar returns. This is because, at the time of investing, there is no greater clarity. Every investment should be mapped to a goal and if it happens to be equity oriented, it should be mapped to a long-term goal. This would ensure that the returns generated by the fund are made use of by the investor too by staying with the scheme longer.
Ponder over the following that would help you to multiply your money by investing in Mutual Funds –
- Select a good mutual fund ( It is difficult to identify the BEST, always)
- Map your investment to your goal. Else you will not know when to exit.
- If you have money, invest lump sum or do Systematic Transfer plan over a period of 12 months
- If you are short of cash, opt for SIP
- STAY INVESTED till your target year
- PATIENCE is the key to generate returns
- If you are fearful of the market fall or greedy of market high, talk to your investment advisor.
Once again it is time to celebrate the Rs 1000 NAV mark of Reliance Growth Fund, as it reiterates long-term compounding effect of Equity investing. Let’s also take a vow to stay long term and enjoy the party
Mutual funds are generating returns and ensure your mutual fund INVESTMENTS also generate returns. You need to feed only TIME to your investment to get returns.