Hello Sree,
Many of my questions are answered in q& a . Still I an looking for below topic to understand and invert mutual funds.
I understand MF inverstment is subject to market risk, but when i surf for one particular Mutual Fund it shows 1st year return as high and 3ed are more return is less .
How come returns come less as period increases ?
regards
Umesh
2 Answers
Dear Umesh,
Kindly note that returns on Mutual funds are not guaranteed and wont be compounding in a linear way.
The returns for last one year are abnormal, because the markets have been continuously making new highs.
But this performance may or may not be repeated in next one year.
So, the prudent way of investing is, to invest for longer period, so that volatility can be averaged out and we can expect decent returns from equity markets (but again this is not guaranteed).
"Returns over different time-periods can give you different insights."
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