Peter Lynch , who is called the Living Legend of Wall Street, was really great .
From 1977 to 1990, Fidelity Management 'Magellan Fund, while operating the cumulative return 2,700% left an incredible record of. Best of all, the annual rate of return has never been negative for 13 years. Even when the stock price collapsed in 1987, it was truly an'investment guru', which had an annual return of 3%. At that time, one out of 100 US households was said to have joined the Magellan Fund .
However, on the day of his retirement ceremony, Peter Lynch heard startling news. That is, half of those who invested in the Magellan Fund experienced a loss of principal . What was wrong with it? It was because of the short-term investment behavior that repeated subscriptions and redemptions in less than a year.
There are only two frequently asked questions about fund investments that are pouring into securities companies these days.
The person in charge of private banking (PB) or the sales representative who receives an inquiry starts asking about this and that. What is the amount of money to spend, how much of the fund is in total assets, what other funds do you have, what are your returns, what about your age and family? .
Most investors who have been listening for a long time ask:
"So do you mean signing up for a fund or waiting?"
"Do you mean that you have to buy back now to maximize your profits, or do you mean to keep more?"
By this point, the brokerage staff can no longer speak. Nine out of 10 counseling staff say:
"Customer, the stock price has risen so quickly, it would be better to wait for a while."
"The rate of return is more than twice the interest rate of the bank term deposit, so please redeem it and wait."
Fund experts worry in one voice that "stocks and funds have completely different mechanisms, and people keep trying to invest in funds like stocks." The idea of selling when the stock price rises and buying when it falls is applied to the fund. It's a pity to check your fund's return on a daily basis just like checking stock prices.
If so, what kind of analysis should individuals who are thinking about fund investment and redemption now?
The first thing you need is an analysis of your financial situation, such as age, income source, and the proportion of investment assets. If you are a new employee in your late twenties who started investing in accumulated funds just a few months ago, it is contradictory to think about'repurchase'. Regardless of the fluctuations in the market, you have to make an effort to use half of your salary for finance.
On the other hand, even in their late twenties, if a female office worker is about to get married next month with 5 years of experience, it is best to realize profits through redemption by now. It is not the norm for investors in their mid-50s to invest several billion in stock-type funds in the 1700s.
Considering age, now is the time to focus on securing safe assets such as hybrid funds or bond funds.
The worry about joining the fund and redeeming it is the biggest for investors who already have two or three domestic equity-type funds and have already maintained it for more than three years and raised an annual return of about 30%. The investment amount is less than 100 million, and we are hesitant to increase the fund.
These investors should clearly check and prepare for the following three issues.
The first is the trend of future cash cost flows. For example, if you absolutely need a large amount of money within a year, it is now the stage to reduce the proportion of investment. On the other hand, if the expenditure is relatively stable, you may consider investing in additional funds.
Once you've decided to invest more, you should now check your fund portfolio, a second factor to consider.
Currently, many domestic and foreign funds are sold. Among them there are stock types, bond types, and real estate and funds
If you are an investor with only two domestic equity funds, you need to analyze what kind of fund it is.
If you already have large-cap funds and small- and mid-cap funds, let's diversify your management style with index funds and value stock funds. Also, it is good to add an additional foreign fund that has a stable annual yield of 10% like a European fund.
Third, setting standards for long-term investment and raising the eye for choosing a fund suitable for long-term investment . Fund investment must also take profit at some point. However, how long it should be maintained is an important consideration.
According to the fund evaluation company Zeroin, the three-year term yield of 151 domestic equity-growth funds that have been maintained for more than three years is 99%. It is concluded that if you closed your eyes and took only one domestic stock-type fund and maintained it for 3 years, you would have earned more than 30% annually.
"If someone asks you how to invest in funds well, they just ask you to invest for a long time,"