Loss on Mutual Funds

After joining NiyoX this month, I thought of doing some investment through the App on my mobile. Mutual funds are being recommended by many. So I invested as below:
Jan 14 - ₹50,000
Jan 17 - ₹40,000
MF are said to give back good returns.
To my utter disappointment, today NiyoX App showed me a loss of about ₹4,800.
Is this a normal trend or can we expect it to go up? How long it takes to get the good returns?
Thanks!

I’m not from NiyoX team or anything, but I’m investing in mutual funds for a long time so can help you with this. Can you please tell me which fund did you invest into? Was it an equity fund or a debt fund? Equity funds are volatile and specially now that the market is at it’s peak and going down due to the budget and foreign investors taking money out of Indian companies, it can go further down. You should have invested with a time period of 5 years at least for an equity, debt funds are okay for a short time period, 1 year and some for 3 years.

Mutual funds are actually great for returns, I got around 70% as well on lumpsum on when the market was down and it’s up now. So it’s totally depends on the time you have invested, the fund you have invested into and so much more, but it’s really a bad time to invest lumpsum right now if you’re not investing for atleast 5-6 years atleast with some SIPs along the way.

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Hey @LiberBliss! Hi. Sorry to know that you are incurring losses at the moment on your investments. :frowning:

However, there is nothing to worry about. This is a part and parcel of how a Mutual fund works. Experts indeed have seen Mutual funds giving good returns but only in the long run. Investments in Mutual Funds can be broadly divided into two types - Equity and Debt.

Equity - In this scheme, the money is mainly invested in shares, and hence Equity investments are considered to be very volatile. So, if you planning for equity investments primarily, it is always recommended to invest only for a long duration. Ups and downs are just how the market works, but in the long run, the market is seen to go upwards generally, and minor ups and downs are averaged out.

You can verify the same by checking the Nifty levels when it was in the year 2010 to now. You can also check the high the global markets had reached after the Subprime mortgage crisis, or Indian markets had reached after the crash during the pandemic.

Another helpful blog in these lines is this - Is IL&FS India’s Lehman Brothers? Are the markets safe?

As the saying goes - No risk no gain. It seems to fit perfectly with Equity Investments. As you can see there is a high risk involved so it is also seen to give high returns. The good returns that Mutual funds are known to have generally referred to returns generated from Equity investments in the long run.

Debt - In this scheme, the money is mainly invested in Debt instruments like bonds and debentures.

Debt Mutual funds are considered to be a relatively safe investment option. Likewise, returns generated in this are relatively lesser than Equity, generally speaking.

How long does it take to get good returns?

This is a little difficult question to answer however, the long term generally means an investment of a minimum of 7 to 10 years or more.

Disclaimer: This is a very important disclaimer that Investments in Mutual funds are always subject to market risk and there are no guaranteed returns.

If you have any further queries, please drop a mail to investments@goniyo.com someone from our team would be happy to assist you. :slight_smile:

Regards,

Thanks Deepak for a detailed explanation which is really educating for me about the Mutual Funds.

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