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.
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.
Watte analogy! Tofa kabool karo TT
🙃
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 😂
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
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.
This is why financial education is important.