I recently started using an Indian FinTech startup company called Groww to search for some good recommendations - how I came across is it was when they started publishing content around mutual funds (kudos to the guys).
Well, as I was playing with it the other day, and I found an interesting feature.
You can track your external investments in Mutual Funds, thanks to their ability to read the CAMS reports (Provided by CAMS Online - a share transfer registry).
They've made it really easy with an API integration with your Gmail. But I would rather not give them access to read my emails, luckily they had another option - forward the generated CAMS report to their email, and they'll extract the details.
So I gave it a go. It did take a bit of time to get the report from CAMS, but that was CAMS delay, not Growws. And I was pleasantly surprised because there was a mutual fund - SBI Infrastructure Fund - that I remember investing in a long while back, on the recommendation of a relative who worked with the State Bank of India. I can't recall if he would get any commission for recommending this fund, or whether he had some targets to achieve but I thought I'd risk something. You never know, it might help us both.
That was 2007, way before the Modi Government, and I probably believe it was selling the infrastructure story of India. Well, what better time than now, when the market has crashed to see how a long term - BUY & HOLD strategy really works.
Right, so you would think that during this period the results were positive, after all that has been a lucky 13 years. And you'd be right, they were positive. I got...
₹ 6,398 over 13 years for the ₹ 1 lakh investment.
Yes, that's 6.40% over the 13 years. Or roughly 0.50% per year on my investment. I had to check how much the expense ratio was for that mutual fund, and low and behold - it was 2.58%!! (WTF, I thought it would be 1%...)
So basically, the FUND MANAGER has earned 33.54% and I've earned 6.40% on my investment over 13 years. How cool is that! Even if that was 1%, that would be 13%, more than double what I earned! This is an example of how the mutual fund industry is ripping you @#4%^& off.
I have to keep in mind that the bulk of the loss took place in the last 3-6 month period, i.e.30%.
So what would you do, would you buy and hold forever or would you just get out and put your money to better use?
P.S. I haven't really done the maths on a fixed deposit during this period, but I assume it will be more than 40%. Also, this is not an SIP, it was a lump sum investment - but this is to show you that Mutual Funds are not the best investment vehicle given their expense ratios. What's the solution? Signup below to find out...