You might have wondered what mutual fund or stock should I invest in? What parameters should I use? which one should I trust? Trust no one but math. I suck at math so I have a simple formula which avoids FOMO, JOMO, gossip traps and every other pitfall.
- 10yr SMMA CAGR should be the only parameter while choosing a MF. Sort all the MFs (If you know a website which does it) in a descending order of 10yr CAGR. So you are choosing something which is been there for at least 10 years. Select
- one flexicap
- one midcap
- one smallcap
- one gold etf
- one silver etf
and invest a minimal but equal amount into these once. Alternatively you can just choose ETFs if you are worried about the fund house or the fund itself not performing well in future. largecap ETF, midcap etf, smallcap etf (india examples:mon100, midcap150, smallcap250). - Every month or whenever you have money to invest, go to your portfolio, sort them based on their returns and invest that amount into the top 1 or 2 performers. Leave the other 3 bottom performers. If you are doing this routinely, then you will end up investing more into high performers and very less in low performers. So it is your own personal marathon within your portfolio. The top 2 runners get the cookie (investment). It is like SIP but instead of investing in a fixed instrument like stock or MF, you are investing in the top 1 or tope 2 performers.
- One can actually have this as an FOF offering for public.
