Are mutual funds the best long term investment option?
Warren Buffett, probably the most successful investor of all time, says that in short term “stock markets are like voting machines, whereas in long term, they are like weighing machines.” So we can see why mutual funds are the best long term investment option for many.
Predicting the stock market movement on a daily basis is like flipping a coin. Markets gain about 53% of the time and lose around 47%, which is more or less 50/50. But over longer periods, it changes dramatically. Over any 12-month period, the market rises 73%. Since the last 10 years returns, it has risen 93% of the time.
On a daily basis no one can predict where the market is heading – up or down, but in 10 years and going by history, the markets in all probability are going up. This is the biggest difference between long term investing and short term investing. There is huge unpredictability in the short term but, in the long term, stock market investments are a pretty safe bet and can give you very good returns.
Why is this so important?
As an investor if you don’t require funds for the next 10 years or more, the stock markets will give you one of the highest returns on your investment. But if you need money tomorrow, the stock market is a very risky proposition.
If you plan to start investing for retirement, saving for your child’s education or marriage, then you can let your investments run for years if not decades. In these situations, mutual funds are a great investing option.
You can invest in mutual funds for most of your portfolio, and history shows they offer high and attractive returns. Of course, you can’t take history for granted, so we recommend you diversify across debt, FDs, real estate, PPF etc. to reduce your risk over any period.
Don’t forget to think long term, even if it seems like retirement is a long way away. At EzeeHouse, we can show you how to balance your portfolio, given your age and risk appetite. Signup at EzeeHouse.com to create your free account to start investing today !
Can’t get enough of Mr Warren Buffett, then click here to read this interesting money lessons from Warren Buffett article we came across & leave a comment about the best money advice you have ever received !
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There is much importance of mutual funds investment in India. The value of the stock market is forever changing. But on average, there is always a constant increase in value.
Hence mutual funds investment is best for long term plans. Let’s find out how:
Similar to the credit score requirement for loans, a mutual funds portfolio is vital for various reasons.
A clarified portfolio helps access better mutual funds with reasonable and profiting returns.
2. Stock Market Returns
Stock market returns are vital for the future. Unlike loans which cover quick financial emergencies, mutual funds investment returns are rainy-day money for the next decade.
3. Important Events
Investing in mutual funds for future wedding plans, education and retirement can help during emergency fund requirement.
These investments tend to exist for multiple years before you’re ready to use them from the lock-down. Thus, you can keep funds available for the next decade all while making a good portfolio.