"The average tenure of an SIP is starting to increase"
Mutual fund ek aisa aloo hai jo har sabzi mein fit ho jaayega
The good news about 2015 was despite the markets not doing too well, we saw record inflows coming in from retail investors in Mutual funds. Many of the SIPs were continued and that reflects a shift in thinking, doesn't it?
It's amazing that the Indian investor probably has started maturing in terms of his thinking and looking at the benefits of this (mutual funds) product. But, I have to specifically tell you and identify two reasons why this might have happened, one is, over the years you've had people put in money in mutual funds and there has been a demonstrative effect - somebody has made money and you also want to make money; it's very natural to go into an avenue which will probably give you better post tax returns over a period of time. One of the big catalysts in the last year and a half has been the money being spent on investment awareness; the 2 bps the mutual funds industry has been spending. I can't quantify the results immediately but it has been having a ripple effect across the country. We are seeing record transactions coming in from the beyond top 15 centers (B-15) SIP is stable, more and more money is coming in, the average tenure of an SIP is starting to increase and I would attribute that to the 2 bps we are spending on investment awareness.
Why should beginners invest in Mutual Funds?
Two reasons - One, there is this thing which they say in Hindi - "Mutual fund ek aisa aloo hai jo har sabzi mein fit ho jaayega". Whatever your risk appetite, whatever your horizon or need, you would find a mutual fund product that is useful for you. The other aspect is people get intimidated by getting into a new investment avenue if they haven't tried it before. And it has more to do with comfort than conviction. You're convinced that MFs are very good but you choose a bank FD because that's what you're comfortable with. My request to people on the fence is that to start an SIP or put money in a liquid fund, wait for a week and take it out. See how beautifully the entire process works, how fast you get your redemption, get comfortable with the entire thing. Once you're comfortable, you start trusting that avenue more and that is when you should start looking at serious risk profiling and investment for the long run.