There is one common question which popped up in my recent interactions with investors and it was their worry about the negative returns on their mutual funds and stocks in the last one year. In fact, if you look at the performance of any MF scheme in the mid-cap category for a period of one year, then you would find that almost all of them have generated a negative return of -12 to -14% on an average. The returns are negative for large-cap (approximately -5%) and multi-cap (approximately -3%) schemes as well. 

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Investors also compared returns from equity MFs with fixed deposits and raised a point that it would have been better for them to have invested money in an FD. That would have given them some positive returns during this period. 

So, what should an investor do in this situation? Should they worry about returns in spite of knowing that they have invested for the long term and equity investments needs fair amount of time to generate great returns? Well, let me quote the legendary investor George Soros to answer this. He famously said that if investing is entertaining and if you are having fun, you are probably not making any money. Good investing is boring.

I would like to add to this that not only is investing boring, but it can also be demotivating at times like in the instances as mentioned above, where an investor feels betrayed. In any case, if you are an investor who gets demotivated or unhappy on seeing negative returns in the short term, then the first thing you should work out is on your expectation mismatch. If your money is invested in good funds and aligned to your financial goals after doing a holistic financial planning, then there is no reason to worry about any temporary ups and down which is an inherent nature of the stock market.   

Investing is also boring because there is no instant gratification in the form of returns. Remember, it is your hard-earned money. So, if you want to chase excitement then it may kill your long-term wealth creation goal. It has been proved historically that any exciting or quick money-making schemes have always destroyed investors’ wealth. Like as seen in the recent bitcoin and crypto schemes saga. Though the underlying asset or technology is sound, the way people invest to make quick gains distorted everything. Likewise people also invest in penny stocks and lose their money. In fact, look at another great investor Warren Buffet, who created an empire by investing in good, but so called boring stocks over long term.

What you need to do is to follow basics and invest monthly or a lumpsum over a long-term period and monitor it on a regular basis. Look for excitement from things you are passionate about. Always remember that investing is not fun and it will excite you only in the long run when your money will start making money for you. For that, you have to be patient enough to see your investments turns in to a cash cow. 

I would end this by stating that the category of MF schemes I have mentioned earlier has resulted into a positive gain on a yearly basis ranging from 15 - 20% (on an average) for large-cap, multi-cap and mid- cap categories over the last 10 years.  

The writer is chief gardener, Money Plant Consultancy