Stock market vs mutual funds: While investing in mutual funds or stock market, one needs an expert to get better returns on one’s money. However, sometimes even expert advice fails to yield in sync with one’s expected return. In such a scenario, an investor feels disheartened as long term investors find it difficult to bridge the gap in between the return they expected and the return they received in reality.
For such investors, having a diversified portfolio is one of the most suitable option. But, even in a diversified portfolio, monkey investment experiment can help a mutual fund investor or stock market investor to meet one’s expectation after investing for a longer period.
What monkey investment experiment mean?
Explaining the monkey investing experiment that one can do while making one’s portfolio, SEBI registered expert Jitendra Solanki said, “Monkey investment experiment means randon selection of stocks from Nifty or Sensex stocks by a stock market investor. For a mutual fund investor, monkey inestment experiment means selection of Nifty ERG or Sensex-related ETFs. These funds give yield in sync with average return given by the index over the period of time.”
Monkey investment calculator
Elaborating upon the benefits of monkey investment for stock market and mutual fund investors, Sandeep Pandey, Director at Basav Capital said, “For a long term stock market investor, it would be difficult to monitor the company and its business. In that case, choosing a Nifty 50 stock for long term means Nifty would mange your portfolio as a weak company can’t remain in the index. For a layman investor looking forward to invest in mutual funds, Nifty ETF can be a good option as it would give average of the Nifty return given over the period of investment.”
Those looking forward for monkey investment experiment should know that Nifty has given around 8 per cent return in YTD, over 16.25 per cent return in last one year whereas in last five years, Nifty has delivered more than 90 per cent return to its investors. So, a monkey investment experiment done in this period would have delivered around these level returns for a mutual fund investor.
Stock market vs mutual funds: Which is better for monkey investment
On how much a long term investor can expect from monkey investment experiment, Pankaj Mathpal, MD & CEO at Optima Money Managers said, “In long term perspective, one may expect at least 12 per cent CAGR return on one’s investment.”
On which is better for monkey investment, Pankaj Mathpal said, “It depends upon the risk appetite of the investor. High risk investors can choose direct stock investment whereas investors with low risk appetite can opt mutual fund option.”
Source : Mint