Anushka Rathod: Avoid This Common Mistake When Investing in Mutual Funds
Anushka highlights a common mistake that investors make
Photo Credit: Anushka Rathod Instagram
- Analysing mutual fund performance beyond surface-level data
- The importance of rolling returns in investment decisions
- Using unbiased rolling returns to make informed investment choices
When it comes to making wise investing decisions, it is critical to look below the surface. Anushka Rathod, a seasoned investor, and financial counsellor, gives helpful tips on how to make better judgments when investing in mutual funds.
The Issue with Conventional Return Analysis:
Anushka highlights a common mistake that investors make: depending entirely on mutual fund historical results, which typically range from 5 to 10 years. This strategy, however, can be deceptive because these returns can be modified by specific economic conditions, such as soaring markets or sector crashes.
Rolling Returns are now available:
Anushka suggests using rolling returns to analyze a mutual fund's performance because it is more accurate and neutral. Rolling returns are calculated by taking the annualized average of numerous time periods of the same duration within a specified timeframe.
What Are Rolling Returns?
She illustrates the topic with an example: Assume you wish to assess a mutual fund's performance over the course of five years. You evaluate different 5-year time periods during the last 15 years rather than just the total return over the last 5 years. These time periods can be taken monthly, weekly, or even daily to provide a more complete picture of the fund's performance.
The Main Advantage: Unbiased Results:
Rolling returns provide a significant benefit since they smooth out the ups and downs produced by economic events over time. This averaging assures that the fund's performance is fair and unbiased, lowering the danger of making investing decisions based on inaccurate statistics.
Making Sound Investment Decisions:
Anushka suggests using online calculators like 'advisorkhoj,' which can help investors calculate rolling returns quickly. When selecting mutual funds for your portfolio, you can make more confident and informed decisions by including rolling returns in your investing analysis.
Understanding how to appropriately analyze performance in the realm of mutual fund investing is critical to developing a solid and lucrative portfolio. Anushka Rathod's rolling returns guidance gives investors a vital tool for making smarter, more informed investing decisions.