Are Mutual Funds really risky??

We meet a lot of people who want to invest in Mutual funds for long term and we help them do so. But the moment the market corrects (falls) a bit, they tend to get restless and forget about the initial investment time horizon they had planned for. They start feeling that it’s risker than they thought and they redeem. I would request you to please look at just one of the graphs that we pulled out from hundreds of schemes.

Do you still feel that stock market is risky (considering long term …10-15 years).

In fact if you notice, if you had bought around 50 when most people were selling because of fear of markets going down further, then from 2009 till 2018, your money would have become 10 times.

Is there any other legal way that you can make your money 10x in 10-15 years??

However, there would have been risk if you invest around “D” and then redeemed it before 2010. It took only 2 years from 2008 to get back to the same level. 2 Years is nothing if we are talking about 10-15 year scenario.

Now look at this scenario:

Even if you had invested at point “D” in the past, which was when the market was at its PEAK. Even then you would have made 300% return (with this particular mutual fund) in 10 years. Do you still think stock market is risky?

Risk comes from lack of knowledge and understanding. Risk is there in our minds. When we gain knowledge, we don’t find that particular thing risky. There are 100s of examples in our daily lives.

Right from crossing a road when we were kids, to riding a bike or our grandfathers operating smart phones for the first time, people who climb up escalators for the first time…”they feel” their foot will get stuck in between. But with minimum precaution…the risk is no longer there.

Disclaimer: The above graph is just one of the many mutual fund schemes available and is used for explaining the concept that stock markets are not risky in the long run.

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