Personal Finance Community

by CuteCleft79

Stealth

10 months ago

I'm investing 1000 each in 35 mutual funds, but don't see any wrong in it.

Hi folks I'm a 21 year old, investing 1000 each into 35 mutual funds Taking my SIP to 35k per month Just to set the context, apart from this, I'm passively investing into ipo's and stocks as well for the long term. I've read at a lot of places that investing in more than 10 mutual funds is a foolish choice, because most of your stocks are going to be overlapping. But I don't understand why it's called foolish? There can't be a 100% overlap of portfolio between any 2 mutual fund houses, there is always going to be a significant difference, which adds to the risk diversification any which ways, because my money is spread across multiple set of stocks and across different fund manager brains as well, for e.g. one might sell some of my stock at a high or a low, while other might not. My diversification is - 45% small cap 25% mid cap 10% large cap Rest growth or sectoral I'm open for any feedback/criticism or suggestions even.

TallTales69

Unemployed

10 months ago

There's a reason its called three square meals. You concentrate your energy and effort for maximum impact with minimal management overhead (in this case time). Otherwise you can have a spoonful of food every 5 minutes of your waking time. You may end up having the same quantum of food, but outcomes will be dramatically different.

ElonMast

Amazon

10 months ago

Watte analogy! Tofa kabool karo TT

TallTales69

Unemployed

10 months ago

🙃

salt

Gojek

10 months ago

This is so stupid. There is bound to be significant overlap between all of these mutual funds. Furthermore, you could’ve just invested in 2-3 MFs and gotten the same results 😂

Idk

Stealth

10 months ago

the downside to this many MFs is you will not gain optimal returns, as if one mutual fund gives good returns, some other gives negative returns so in total there's no profit. You should optimize for maximum returns. go through indiainvestments on reddit

Shinchan

Microsoft

10 months ago

When you invest into a lot of funds and have a huge overlap, your returns are going to be dictated by the overlap because that's where the majority of your money is. For unique stocks, the % allocation of them in your portfolio is going to be so low, that a multibagger will hardly have any impact on your returns. You would be better off investing into Nifty 500 index fund at this point.

NightCoder

Stealth

10 months ago

This is why financial education is important.

ThoseFarrow

Stealth

10 months ago

I still can't process that at the age of 21 you have enough fund to create SIP of 35k

Indusplateau

Stealth

10 months ago

The first rule of compounding is to not disturb it. Good thing is you started early. Stick to consistency of investing them for next 10 years. You will have pressures from family to invest in FD, land, house, car etc. You can avoid them for a while for the rest build buffers so that you don't disturb the compounding. Diversification is good but eventually people simplify it to 2-3 MF. If you r managing the portfolio youself, explore the passive funds and direct funds. From : Someone who started investing in MF since 23 years of age

MomoMan

TripAdvisor

10 months ago

Significant overlapping also means that you're essentially just following the total market index. Something which can be done by just 1 mutual fund. Over diversification can also reduce rewards as you may not be able to make gains due to loss makers. Low risk but low rewards as well.

tbk

Startup

10 months ago

No of funds needed to be reduced, I'd recommend just keep 1 active growth type and 1 index type, you'll be happier longer term.

ShivBaba

Adobe

10 months ago

Dumbest thing ever

Sreekanth

Unnamed

10 months ago

Sorry to be blunt. I felt you wanted unfimtered comments. You are the worst investor I have seen in my 14 years of experience.

Sreekanth

Unnamed

10 months ago

Unfiltered*

CODERNINENU

HSBC

10 months ago

Rather see which of those you invested are consistently at top and prefer to invest more in them , also invest in Nasdaq index 👉🏻

UnfoldedStove

Stealth

2 months ago

It should ideally be reduced to 4 to 5 funds at max to get proper results. DM to get more details

GlumElk41

Cyware Labs

10 months ago

Try checking which stock these 35 companies invest in you will find alot of overlap.

EncryptedName

Student

10 months ago

Bro please don’t take this the wrong way, but this is really dumb. Returns will be completely fucked. 2 mutual funds are ideal, tops 3.

WorkLifeBalance

Indian Railway Catering & Tourism Corporation Ltd

10 months ago

What's the point? It's over diversification. Might as well put your money in 3-4 different index funds

shpinq

US Based MNC, India location

10 months ago

Over-diversification is very bad.

SabChangaSi

Stealth

10 months ago

Theoretically you're right, it won't matter as much. When you go to clean up your portfolio and harvest your fruits, your CA will charge you 35x the amount he charges to reconcile the amount of 1 MF. You will try to analyse your portfolio every couple of months and make a complete mess because all funds are known to change expense ratios as their thesis can also change. When you try to tell people where you're investing you'll be mocked continuously and you won't know whether you've made a mistake and you'll just end up stopping 34 of them.

overthinker

Student

10 months ago

What do you do for a living sir? I’m really curious

codenerd

Stealth

10 months ago

I just invest 8n around 7-8 SIPs that too twice a month. Once at the beginning and once in. The middle of the month to get more averaging benefit. Even then my monthly total sip is just 15K and been doing this since last couple of years and kind of decent returns only even in this uncertain market.

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