The Economic Policy Paralysis which started during the Dr Manmohan Singh Government has continued into the Narendra Modi government as well due to vested interests of Politicians and small individual investors like you and me have suffered.
Personally, sick and tired of HDFC Mutual Fund poor performance over the last few years, started exiting in 2018 as disclosed here. I always knew that one earns more only when one books profits, as business always involves 2 components buying and selling. For long however, Distributors and IFAs greedy for their own commission have always made us only invest without asking to book profits. Thus all these factors led to take the situation into own hands kicking out all the Distributors and IFAs out of the picture.
I would like to highlight two important things ,
1. How to Choose Mutual Funds for Generating Returns for Long Term Investment Goals ? (Next Article)
2. How Swing Strategy along with SIP will maximize returns ?
Important: Please read the explanation on what Swing Strategy in Mutual Fund is, if you are not already familiar with.
- For all the Observations below, Investment Dates considered is from Jan-2010 till October-2020. [About 10 Years]
- All returns are XIRR (Compounded Returns)
- In 2010, there was no Direct Plan for MF Investment. Hence all the NAVs taken for Calculations are Regular Plan – Growth. [In Direct Mode, the Expense Ratio charged to customer is 1% less compared to Regular mode]
- Fund chosen for the sake of comparison is on random selection with good AUM & 10+ year track record.
So what is the return you’d get if you had invested in NIFTY by means of SIP in the last 10 years ? You’d have gotten 7.96%. In BSE SENSEX it was 7.6% as published here. With Swing Strategy, NIFTY returns would be 9.86%
Category MidCap Mutual Fund – SIP Vs Swing RoI Calculation over 10 year period
As you can see above, MidCap Funds have beaten NIFTY returns by a huge margin. The Swing Strategy has helped generate an additional 3% returns.
1. It is clearly evident, SWING SIP / STP Strategy of Investment in MF will always Produce Higher Returns over a 10 Year Period than the Regular SIP
2. Add an additional 1% to this because now we can invest using Direct Mode / Plan of Investment in MF
3. What about Short Term Capital Gains, if at all they arise ? Yes, you should meet them from your pocket during the years when you are actively earning. You should consider lucky if STCG scenario arises 🙂
4. At times I may have to add more than the SIP Monthly Contribution – So what is the Maximum Provision that need to be made ? This will not come every month and this comes once in a while it will be equivalent to 3X the normal SIP amount.
Questions and Comments are Most Welcome 🙂
DISCLOSURE:Thoughts expressed in this article are facts and need not be taken as an investment advise as we are not registered with SEBI, thus do your own study, research, discuss with high IQ friends and then arrive at your own decision.