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Life is so difficult to lead these days. It’s really not easy being an investor these days. Our parents had it better. Much better!(thoughI would not admit it to them) Few TV channels, few investment choices (Arre paisa kahan tha invest karno parents have often said) I am an ordinary investor,educated , Gen X investor, the generation who saw Indian economy opening in 1990s. (For Gen Y it seems even better) I have multiple TV channels beamed 24 X 7 (and as my kids want to watch their TV programs, multiple TVs), I am connected 24 X 7 ( if broadband is not working I get withdrawal symptoms) , everything is at the click of the mouse Mere paas bangla hai, gaadi hai , MAA bhi. (Saath mein job stress, traffic jam stress) aur thoda savings which I want to invest.

I read, inflation, is a ravenous beast that eats away the value of every rupee I earn. So if I plan to achieve my long-term financial goals – from college savings for my children to my own retirement – I need to choose investments that will provide sufficient returns after factoring in the rate of inflation. And for it I must invest in equity or have an asset allocation with 100% – my age, in equity. The experts, the advisors, get very uptight and upset by investments they call Fixed deposit, it’s not tax efficient they say. And I by reading newspapers, listening to experts on the channel, think why should I invest in baba adam ke zamane wale Post office and Fixed Deposit, woh to hue purane. It’s time to move on,move to Mutual Funds Baby!

New investors looking to invest for the future are usually faced with two main options – mutual funds or individual stocks. “Ask yourself do you have the time to research stocks” experts ask , “If you are willing to put in the time and energy to learn about security analysis and apply it to research individual stocks and monitor your holdings over time, go with individual stocks. But if you have no time or inclination for this, buying mutual funds is your  best option” “Yahen to marne ki bhi phursat nahin hai” I think. I, an ordinary middle class person, is caught up in the battle of everyday life, it leaves little time for goals such as everyday workouts and financial planning. Giving your money to a professional manager seems like a no-brainer. Who would be better equipped to deliver market-beating performance than a pro? So what if I have to pay a little as fee when I make double digit returns 1-2% kya pharak patdha hai. And like Sheik Chilli I start dreaming of putting my kids in the best college, going for phoren vacations, enjoying my retirement doling out gifts to my pote-potiyan! But first I have to choose the mutual funds.

With over 850 schemes , finding scheme to invest is an onerous task. Celebrities promote insurance schemes, banking & brokerage services but Not Mutual funds (I am told SEBI has a strict advertisement code. Securities Exchange Board of India (SEBI) is the regulatory body for all the mutual funds I was informed.). So I cannot say “Mujh mein aur Shahrukh Khan[substitute with your favourite actor, Amitabh, Katrina]  mein ek cheeze tu common hai woh bhi..isme invest karta hai aur main bhi” Celebrities endorsements do help when you narrow down the choices. That’s why I take bath with Lux and drive an i10 . Mutual fund advertisements talk about returns , Annualized, CAGR (CAGR reminds me of CGPA and though we enjoy Five point Someone we don’t want to be an idiot ,want nothing less than 10 okay 9.8 (nobody is perfect) if we couldn’t get it, it was okay, But our children must).

With several hundreds of schemes on offer, mutual fund investors are spoilt for choice there are large cap, small cap, equity, debt, gold, ETF, sector based funds such as tech, financial, retail or energy to commodities to foreign indexes. The sheer number of mutual fund schemes on offer  intimidated me. It’s like the buffet in the marriage party which has everything from Chinese, Chaat to Mexican, Samajh hi nahin aata khaoon kya aur choodon kya? Bhai pet tu ek hi hai na! Like in marriage reception I ask friends, family to tell me kaun sa item badiiya hai With courage I ask for Mutual funds also(We can joke about poonam pandey and Dhoni but talking about money is kind of big Social No NO). I end up with varied answers and their experience how they dabbled in stock market and lost their money, stock market to tauba tauba. I am in this alone and I want to better than playing inky pinky ponky, after all mere mehnat ki kamai hai . Yeh ko khana ka item thoda hi hai ki acha nahin laga to chod diya!

Googling “How to choose a mutual fund” gives me more than million results (that too in 0.25 seconds). I am overloaded with information about style of fund, benchmark returns,category returns, fund manager, size of fund,risk parameters, such as standard deviation and beta, parameters for risk-adjusted return, such as Sharpe ratio and Treynor ratio. I feel I am drowning in information, I take a deep breath and repeat to myself “Focus focus” . Numbers don’t lie, I am reminded so I decide to focus on performance. I am told fund should have beaten its benchmark over different time horizons, such as six months, one year, three years and five years. Besides a good absolute performance, you should also consider consistency since it is easier for an investor to hold on to a fund whose returns are consistent. What should I give more weightage to 1 year performance, 3 year performance, 5 year performance or …

Getting restless I attempt to simplify this decision by looking at what rating the fund has been assigned by any of the rating agencies. Fund ratings give a fair idea about the past performance adjusted for risk. A consistency in such ratings quarter after quarter reflects the ability of a fund manager to generate consistent returns over the long term. I think rating agencies kuch soch ki hai ratings deti hongi, Ab 5 , 4 star hotel mein khana is beyond my budget but I can invest in 5, 4 star fund atleast. Nothing but the best for me I say to myself. Then I read A fund’s rating, by itself, does not tell you whether it is a good or bad option. What it does is serve as a starting point in the process of filtering mutual funds to arrive at the right one. While I decide should I go with a Top 200 or a blue chip fund or a Balanced fund.( My state is like that of a woman getting dressed for a function in which she has to look best and tries out all her clothes in the wardrobe, often declaring Mere paas tu kuch acha pehene ko hi nahin hai!). I also have other decisions to make

Should I invest in lump sum or invest regularly through Systematic Investment Plan. SIP helps to navigate volatile markets, boond boond say sagar banta hai (I am reminded by a crow, by Einstein like small kid)

Should I invest through a broker, a broking platform or directly. A penny saved is a penny earned, right?,Now, you can invest in mutual fund, SIPs in the Direct Plan option. If you invest so, without any agent, you will get higher NAV and better return. In the long run, it will make a huge difference.

Over period of time I end up having few funds in my portfolio as I wanted a fund which is of good pedigree, has given handsome returns, is consistent, Just like Draupadi who asked Shiva for a husband who was noble and strong and skilled with the bow and handsome and wise. Since no single man possesses all five traits, Shiva gave her five husbands instead each with one trait. First I invested through broker (i get his advice), then I try my broking platform (how simple it is just few clicks to invest) and through direct also (sab tarah ka experience hona chahiye na!) I also invested in debt funds (they are more tax efficient than Fixed Deposit !)Phoren vacation (Las Vegas jaaon ki Singapore) aa raha hoon main!

I understood (or thought so that) If you are an equity fund investor, you should be in it for the long-term and you should be investing steadily. Most of all, you should not be watching the market like a hawk, ready to pounce on the first opportunity to book a profit, or some such idea. So the answer to the ‘when’ is entirely internal to your needs, rather than anything external.  Over a period of time, the funds that I had chosen carefully(okay I looked that its relative risk-adjusted performance, such as expressed in the star rating or some such system), degraded in rating. A 5 star fund became a 4 star (experts said don’t worry hold on it’s a temporary blip) then a 3 star and then I they say switch. A star mutual fund manager made wrong bets aur mera paisa dhoob gaya..meri ankhoon ke samne aur mein kuch na kar saka. But when you see that funds have done no better than banks deposits and probably destroyed value leave alone adjusting for inflation , dil pei kya gujarati hai tum kya jaano Sandeep Babu, Prashant Babu. Should I leave the fund if yes where should I put it?Newton’s Inertia (or so I thought till I came to know that behavioral economics calls it Loss aversion ) made me maintain status quo. Maine tu long term ke liye invest kiya hai, I console myself..I ignored the voice that asked me Par kitna lon…g intezaar karooge..

 Equity funds to choodo maine tu debt funds main bhi loss khaya hai. The term roller coaster ride has very often been used for schemes of equity mutual fundsbut this has of late become a reality for debt funds as wellWho would have imagined that currency fall would cause NAVs to fall so sharply! (Truth is stranger than Fiction) The steep fall in the rupee forced RBI to take measures to arrest the fall. The best possible route to arrest this downfall was to tighten the liquidity position in the economy. My parents KISS(Keep it simple stupid) strategy in Fixed Deposit seemed so right,kam se kam returns to assured tha.

Meri  investing ki thinking mein itne ched ho gaye hai, itne ched ho gaye hai,  ki hum to confuse ho gaye hain ! Kya kare kya na kare yeh sun lo mere bhai , Koi to bataa de iska Hal o mere bhai. 

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Note: Dear readers I have not come here to bury Mutual Funds. I have personally invested and continue to invest in Mutual Funds (as of now).  My intentions is not hurt any one but just to voice some thoughts, in a light hearted way which my friends,readers and I have voiced or felt some time or the other.