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Worried about Risk & Volatility involved your Investment's - Here's the solution
(Source: Money Inc)

Worried about Risk & Volatility involved your Investment’s – Here’s the solution

Maulesh : Dr. AAA, mutual fund is risky investment yar. My portfolio was positive Rs. 100000/- in last week but today it was negative by Rs. 50000/-

Dr. AAA : Maulesh, It is not risky. It is only volatile investment.

Maulesh : Both are same

Dr. AAA : No. There is a huge difference between volatility and risk. Let me explain by example.

If someone would have invested Rs. 100000/- in popular scheme of MF in January 2008, the value in March 2009 was Rs. 45479/- (-54.5% down)

Maulesh : OMG!!!

Dr. AAA : But do you know the value in November 2010 ?

Maulesh : May be Rs. 70000 or 80000…

Dr. AAA : No, it was Rs. 136687/- (200% up from March 2009)

Maulesh : OMG

Dr. AAA : not only that, the value in January 2015 was Rs. 212855/- (55.7% up from November 2010)

Maulesh : ok

Dr. AAA : But again in February 2016, it was Rs. 156398/- (-26.5% down from January 2015)

Maulesh : Oh no, again

Dr. AAA : And 18th May 2018 value was Rs. 252049/-

Maulesh : What a roller coaster ride!!!?

Dr. AAA : But despite the roller coaster ride, from Jan 2008 to May 2018, Rs. 100000/- has grown to Rs. 252049 (152.05%)

Maulesh : Right, Mutual fund is not risky but volatile. I can understand the difference now.👍

Dr. AAA : Understand one thing…Give time to grow your investment. Don’t jump in to conclusion looking 1 or 2 years return

Maulesh : Right.

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