Is it Good to Invest in Multiple Mutual Funds?

Actual Question:

Is it good to add Birla Sunlife Frontline ICICI value discovery SIPs to one’s existing Axis Long Term, Franklin Small Caps and Reliance Tax Saver?

Answer:

Dear Friend!

• Please do not disturb the investments already made. Let them be for a very, very long time.
• All future investments please make only in a low-cost, Equity, Index fund or an exchange traded index fund, where the fund management cost is below 0.50%.
• Mutual funds bring out new, exotic sounding schemes for market differentiation purposes and attracting investments. Please do not get carried away by such names. The actively traded finds charge 3 to 4% fund management fees per annum. This is a huge and unjustified cost when we are talking about real wealth creation over 30–35 years.
• Go for a solid institution, which can be expected to be in business for the next 100 years - SBI, HDFC.
• Any other investment idea really does not make any great difference.

 Please read the following related articles for better understanding:

• Miracle of Compounding
• How Frequent Changes to Mutual Fund Portfolio Affect Investor Interest?
• How to Choose the Right Mutual Fund to Invest?
• Which is the Best Indian Hedge Fund?
• How to Invest in Overseas Stock Markets?

To conclude there is no harm in investing in multiple mutual funds so long as one invests in a low-cost index fund or an exchange traded fund (ETF).

Thank you,

With Best Regards

Anand

Don't Play a Game That You Don't Understand

"There are some parts of the game that we don't understand, so we don't play with them."
Warren Buffett