Why Mutual Funds would never make you wealthy

When we think about stocks, we think of traumas; both in the financial world and personal ones. Yet, when we think about Mutual funds in India, It reminds us of a well thought out robust plan that went according to it and that no matter what, the mutual fund industry is shock proof.

Below, I will list points of why Mutual Funds are beneficial(rightfully) and after I'll challenge your thought process of why you're limiting your actual financial growth and growth mindset to achieve financial independence;

1. The availability of choice; return rate, safety, ease of liquidity, investment capital, top wealth managers and diversification.

2. The ease of stress.

If this were true then why did the following happen;

• Debt mutual funds witnessed record outflows of Rs 1.94 lakh crores in March 2020. On the other hand, equity funds saw a significant dip in inflows in April 2020 to Rs 6,212.96 crores. It fell almost 50% from March 2020.

• Credit-risk funds saw record outflows of Rs 19,238 crores, in April 2020. While this category saw redemption pressure for quite some time before the pandemic hit, the rising number of cases rising just added some more spice to the fire.

Two questions is all I have to ask;

1. Were these outflows due to the realization that over a period of time that equity would outperform every asset class?(I don't consider crypto an asset)

2. Did the people finally get their "rock bottom"?

Trying to "time the market" is like catching a falling knife and if you're an investor; it doesn't matter when you invest.

So, If the general consensus is that Mutual funds provide; A better rate of return, safer than equities, yet (RBI had to pump 50,000 crores to solve the liquidity issue) and easy to pull out of... you see, now; Mutual funds is just 'smoke and Mirrors'. It isn't safe, there's no ease in liquidity, It can't give a guaranteed return, because due to the averages of stocks owned it can drag down any.. I repeat it can drag down any equity basket.

So, what's my point? How can we make investing easier? Can we limit the downside? can our investment in equities be safe? without spending time on which stocks to invest?

Here's my answer;

Simply go to any store where you buy consumer discretionary items and think "would one day everybody stop buying tea/biscuits/soap/shampoo/noodles/frozen foods/milk?".

There, you got your answer for question one and three, Would the government stop spending money on public constructions? No! Would those materials and those companies go out of business? thereby knocking down the entire economy, without infrastructure, our life crumbles.

Warren Buffett famously said;

Anybody can make a 50% return, but the greater achievement is when the market declines 50%, your stocks drop 25%

This to me is how Investing should be viewed, not all flamboyant "I made ... amount of money". Answer to question two. Investing is about keeping your money safe, having a great ROI in companies with better ROA which determine the ROE. And this is the answer to the final question.

I would like to end by saying; We complicate investing, we over view it with unnecessary cynicism. Demand and supply.

Some might still argue; Mutual funds give me a guaranteed return.

To that I reply; Why settle for a 50% return from 2020 when i made a 280%? I've made my LP's a ton of money being just 23 at the time. Why? Because I don't lose money and I don't get greedy!

I have faith that this has been informative, I surely believe that.

And I hope we move to equities to make our lives more prosperous.