“Mutual fund investments are subject to market risk. Please read all scheme related documents carefully.”
We have heard these lines during mutual funds advertisements. It's a warning that comes in a mild tone all the time for this form of investment and soon after these lines we see a smiling family, a dream home or a dream car bought with the money gained from these investments. The message comes in contradiction; happiness + risk. And we conveniently overlook the risk part and choose the happiness part.
With cryptos also it is the same, there are risk associated with it at a large level but we choose to ignore it and invest in it. The safest investments never give the kind of returns that these risky investments give and we all want to earn more, so we get into the trap. And there is no wrong or right about it. It's all about making informed decisions.
When these disclaimers are made, they are with a reason, when it's mentioned market risk it does mean honesty that there is risk. If it's not happened probably for 10, 15 years, it does not mean the risk is eliminated. When we put money in these schemes, they are not deposited in a safe deposit vault, they are out there in open being dealt by people and hence there is a risk.
Even after this warning people believe Mutual funds are a safe place to invest and to an extent even, I think it that way. The reason being that there is some kind of regulations in it, there are SEBI rules and no one can actually run away with the money. Which in crypto it's not safe. Then with Mutual fund there a daily NAV disclosure, there are trustees, auditors and there is diversification of assets in the portfolio. All of this together gives us confidence of safety.
In the recent times when the markets are volatile, the stock markets going down has impacted Mutual fund values but then it's temporary. In the end with a long term vision, it is going to be a profitable investment.
I believe they are the best tool to beat the inflation.
Thank you for visiting my blog. 👼🏻👼🏻💖💖🌹🌺🌸