Do you know anybody who had suffered loss by investing in mutual funds?

I am curious to know what are the possibilities due to which one may suffer loss by investing in mutual funds. I understand some risk is involved as usual but by knowing some specific examples of incurring loss, I will understand the issue better. So please share any incidemt you know and also indicate how the peroson might have avoided the mistake she/he made. Thanks in advance.

6 Replies to “Do you know anybody who had suffered loss by investing in mutual funds?”

  1. Mutual funds are a lazy way of investing and you pay a fee to have people manage those funds for you (MER)-management expense ratio.

    Before diving in, a bank or investment firm should go through a series of questions with you that will help determine what your risk tolerance is. Based on those stats, they will be able to show you specific funds that are in your risk category, and that is essentially the best risk management with mutual funds, knowing what your willing to risk for the reward.

    More specific to your question, if you were in a mutual fund that was solely invested in a sector such as commodities (metals, oil, etc) you would probably see spikes up and spikes down, as eg. oil and gold prices tend to do.

    If you were in a balanced fund that was weighted to have say such a percent in equity, and the other percent in bonds, well that would be a much safer way because usually when one goes up the other is down, and vice versa, many banks will call something like this a balance growth mutual fund. You won’t get rich, but with compound interest and possibly many years ahead of you, the trends show that it will go up and down, but usually you gain some in the end.

  2. Most people who lose large amounts in mutual funds do so because they “panic” and redeem shares while the fund assets are depressed. Mutual funds are designed for long term investing – not short term “trading.”

  3. I lost some money when I invested in ICICI mutual fund units when they started long back. After investing Rs.10/- we got back Rs.8/- or so after many years. It was a very very bad experience.

    People have lost money in Unit Trust schemes,too when it was folded long back. Mind you, UTI was a mutual fund since 1964.

    A lesson is : don’t trust anybody what ever be the credentials and past record.

  4. yes, I have personally seen the person, who had suffered a loss even after invest their money worth Rs. 40,000 for One & Half Year and then after he gets only Rs. 38,500. So, its not and easy or safe to invest in mutual fund all time.

  5. when sensex was 17000 in jan 2008, jm emerging leader was 12 rs….then market crashed and it went down to Rs.3 and now when market is at 17000, it is only 8 Rs. all indices go up or down with disparity, but it is a puzzle where the money has gone from this fund ?

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