Expected Return

Investment Awareness (on Expected Return)

Assume, RS 100 is invested for 20 years by SYSTEMATIC METHOD AND FEAR-GREED BASED METHOD OR RANDOMLY. The simple graphs below can enlighten anyone from beginner to advance investors that the capital preservation and allowance for infinite growth is the core function of investment. We see that Fear and Greed based investing is exciting with random high returns and systematic portfolio is boring. But the final result on systematic portfolio is achieved as annual 20% and on fear and greed based portfolio is 4%. Therefore capital preservation, emotionless and consistent returns is expected from Systematic Portfolio.Those who follow random investment methods get bored in consistent return and excited in noisy returns. They are fooled by high random returns and start gambling. This is the only risk in investing. We can control ourselves but nothing else. It is possible only with discipline in investing. The discipline anchors the investors to a systematic plan, ultimately peace of mind. ” Invest from inside not outside”

CHART A SHOWS THE YEARLY REUTRNS ON SYSTEMATIC PORTFOLIO AND FEAR-GREED/RANDOM PORTFOLIO. RETURNS MENTIONED IS A SCENARIO AMONG MANY (BUT SIMILAR PATTERN IN MOST CASES). CHART B SHOWS THE GROWTH LINE OF INVESTED CAPITAL (YEARLY) FOR BOTH PORTFOLIOS ASSUMING THE YEARLY RETURN IS REINVESTED.

CHART A (RETURNS %)

  • Fear & Greed Portfolio
  • Systematic Portfolio

CHART B (YEARLY PORTFOLIO CUMULATIVE VALUE)

  • Fear & Greed based Portfolio
  • Systematic Portfolio