We are only worried about losses which we can see lump sum – up front charges vis-à-vis a slow erosion in high fund management annual charges.

Let us say there is a fund with a 30% entry load but it has a very low annual portfolio management charge – say 0.8% p.a. on the assets and there is another fund with a 5% entry load and a 2.5% amc…which fund is cheaper? Well assuming you stay on in the fund for say 30 years, there is absolutely no question that the first fund is far cheaper. Most people when comparing 2 products have NO CLUE as to what they are comparing! Remember – a higher recurring charge on an increasing asset value rips off the value, and compounding hurts it more – a clear double whammy.

There is an inviolate investment axiom that low risk investments yield only low rates of return and higher returns are achieved only by moving to a higher level of risk.

Assuming of course that you understand all the types of risk that exist. From volatility to inflation. Simply because real estate and equities have volatility risk and low interest yielding debt like G secs has an inflation risk. So this axiom is just telling you the importance of having a nice well diversified portfolio that helps you meet all your goals while allowing you to sleep tight in the night. The people who have got higher return may have got more returns, but that does not mean that ALL people who took high risk got high returns.

Both risk and reward are time dependent. As time progresses, inflation makes low yielding investments riskier while higher risk investments become more stable and predictable over time.

Self explanatory, is it not? So good quality equity is risky in the short run, and even good quality debt is risky in the long run because of a hidden monster called inflation.

When we make an investment, we buy a piece of a business. By definition, then, our time horizon must be long

term.

This statement has been attributed to many people including Warren Buffett….self explanatory I presume….