/I am concerned about performance of my mutual funds. What should I do?

I am concerned about performance of my mutual funds. What should I do?

I have been investing in SBI Bluechip Fund and Franklin Focused Equity Fund for the last three years. But I am not getting the desired return… I am really worried about the performance of these two funds. Considering my investment horizon of 25-30 years, please suggest what needs to be done for wealth creation in the long run?
– Bikramjit Dutta

Ashish Modani, Founder, SLA Financial Solutions, responds :

I think you started investing in these funds may be around 2017 when they were offering very good returns. It seems, you have started investing based on the performance. I am sure you had a target of 25-30 years even at that time. Most people make the mistake of investing on the basis of past performance. They pick up one of the best performing funds and start expecting that the same performance level would continue. No fund has performed well forever over long periods of time. Every fund goes through highs and lows. Take up any fund which you think has done very well over last 20-25 years and you will find multiple years of underperformance in them.

It is investors who will have to remain consistent with their behaviour pattern. One should not become overoptimistic when funds are doing great. Or become extra pessimistic when they are doing badly. The only way to manage finance over such long periods of time (which is anyways essential for wealth creation) is to maintain asset allocation, keep rebalancing between different asset class and have reasonable expectations.

The funds you have mentioned are good funds and are reasonable for future. You may add mid cap, small cap and debt funds as well for diversification. My sincere advice would be to hire a financial professional as it is quite overwhelming for investors to handle their own portfolio. Also. big mistakes happen when portfolio starts to become bigger. The worst happens when investors start to make their investment decisions based on the market condition.

You mentioned wealth creation. Here are 5 mantras of wealth creation:

Save and invest more
Keep it Simple
Think Long
Be regular
Stay Focused

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