Hello Readers!

Creating Wealth is all about how much you save, how much you invest, where you invest, and most importantly how regularly do you invest. In Equity Mutual Fund, as per experts and historical returns, it proves that investing in Equity best gives its returns when carried for long-term.

Well, investing in Mutual funds, it is advised to invest for a period of 10-20 years to create good wealth. But here apart from the investment tenure there are more factors that affect the return and growth of Equity mutual funds, this is none other than the investing behavior of investors.

The investment behavior of investors generally includes, which asset class they are investing in, what is the mode of their investment in a mutual fund, SIP or lump-sum, what is the trend of their SIP, are they increasing it on intervals or not and many. All these behaviors of investors are responsible for the growth of their investment and thus for the growth of their wealth.

Here I am discussing three behaviors of investment that will show you that to create wealth, more than the markets you need to update your investment behavior.

BEHAVIOR 1

Suppose a man in the year 2000 received or inherited an amount of Rs 10 lakh and put all the money in Equity mutual fund via Lump-sum. He carried his investment for long-term, say for 20 years. He maintained his patience and remain calm during the volatilities of the market, ups, and downs of the market, held himself strong through the global financial crisis, and through the currency crisis of 2013.

Finally, at the may end of 2020, the man is likely to have grown the original amount to an accumulated value of roughly Rs 67 lakh, with a 10% interest rate.

This is the result of his regular investment behavior, his patience that he showed to make long term investing success.

BEHAVIOR 2 

Suppose the same man, instead of choosing lump sum, decided to become a regular investor with the little that you could save in a month and started investing Rs 10,000 each month in equity mutual fund. In a similar time period as above, he would have invested Rs 24.5 lakh in all, which means 245 months of regularly investing Rs 10,000 at the start of each month.

This investment at the end of May 2020 would amount to an accumulated value of roughly Rs 77 lakh with a 10% rate of interest.

Here we can conclude that instead of investing all amounts in one go, investing a small amount on regular intervals and staying invested for the long-term can create good wealth. 

BEHAVIOR 3 

Suppose the same man realized that his income keeps increasing, thus he decided to increase his regular monthly investment by 10% every year from January 2000. We assume you start by investing Rs 10,000 in equity mutual fund, at the start of each month and increase this by 10% every year, up to 20 years.

By the end of May 2020, man’s total investment would be around Rs 69 lakhs which would have grown to an accumulated value of roughly Rs 1.54 crore.

In this we can see, only a 10% annual increase in your regular investment amount in Equity mutual funds, and staying invested regularly can create a lot more wealth.

Well, as said in the first para, investment is all about investors' behavior, how much he invests, where he invests, how he increases his investment amount, all these are factors affecting his investment growth.

The third behavior clearly shows that investing small amounts regularly through SIP is more efficient than investing a large sum in one go via lump-sum. Also, when you invest via SIP, do not opt for a fixed SIP, instead, go with dynamic SIP. At last but not the least, be calm and stay invested for the tenure you have selected. Your these investment behaviors will help you create a good wealth from Equity mutual funds in the long-term.

For any kind of investment query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).