Why Every Percentage Point Matters For You

The market seemed unwilling to take any big steps before the upcoming three-day holiday. With a short four-day week and a long weekend ahead, traders chose to stay cautious.

Major news is expected after the meeting between Russia and the US on the 15th, which may explain why no one wanted to take unnecessary risks.

• Nifty gained a modest 0.05% today.

• Nifty Junior remained higher compared to last week’s close, ending the day at -0.17%.

• Midcaps were down 0.24% and small caps lost 0.43%, showing some weakness.

• The Bank Nifty has been interesting — the last four trading days have been “inside days” within last Friday’s big move.

• Gold, on the other hand, is showing a flag-like pattern, closing today at ₹10,013 per gram with no significant movement.

Other Market Triggers

• Muthoot Finance was a strong mover after excellent results, hitting new highs as gold loan demand surged.

• Deepak Nitrite saw little impact despite a profit drop, as the market had already priced in the news.

What to watch next ?

• Gold prices in USD are in a tight consolidation since April, suggesting a sharp move is coming — either up towards $3,700–$3,800 or down towards $3,500.

• India recorded its second straight month of wholesale deflation, which, while sounding good in the short term, is actually worrying as it reflects weak growth, stagnant credit, and limited private investment. Prolonged deflation can quickly lead to a recession.

• In Nifty, after six straight red candles on the weekly chart, we finally have a green candle, breaking the losing streak. Whether this is the start of a recovery or just a temporary bounce will be seen next week.

Get your Portfolio Momentum Report today and ensure your investments are positioned for success!

What To Read This Week ?

The Hidden Cost of Underperformance: Why Every Percentage Point Matters

The Power of Compounding: A 2% Difference

• Scenario 1: 12% CAGR

  • If your investment grows at a 12% Compound Annual Growth Rate (CAGR) for 10 years, it will swell to a remarkable 3.11 crores. This is more than a three-fold increase, a testament to the power of consistent, strong performance.

• Scenario 2: 10% CAGR

  • Now, let's look at a seemingly minor difference. If your investment grows at just a 10% CAGR over the same period, your final corpus drops to 2.59 crores.

This seemingly small 2% difference in annual returns results in a massive shortfall of over 50 lakh rupees (more than 15%) after just a decade. This stark contrast highlights that even a slight underperformance can lead to a substantial loss of potential wealth.

The Culprits of Underperformance

Why might an investment portfolio underperform?

• High Expense Ratios: Many investors, especially those using distributors, end up in funds with high expense ratios. A distributor may be incentivized to recommend funds that pay them the most, leading to a situation where a significant portion of your returns—potentially up to 2%—is eaten away by fees and commissions. This "intermediation cost" directly impacts your net returns, pushing your CAGR down and costing you a significant amount over the long run.

• Investor Apathy: Another major factor is a lack of attention to one's portfolio. Many investors assume their investments are "doing fine" as long as they are showing some positive return (e.g., 10-18%). Without a proactive approach to monitoring and rectifying underperformance, they miss out on the opportunity to move into better-performing products and align their portfolio with market leaders. This passivity leads to a "loss of opportunity" to maximize returns.

Key Takeaways:

1. Be Cost-Conscious: Always be aware of the expense ratios and fees associated with your investments. Consider direct investment options to minimize these costs and maximize your returns.

2. Actively Monitor Your Portfolio: Don't be complacent. Regularly review the performance of your investments against relevant benchmarks. If a fund is consistently underperforming, don't hesitate to take action.

3. Prioritize Performance: Seek out and invest in the best-performing products available. A proactive, engaged approach to managing your portfolio is essential for long-term financial success.

By understanding the hidden costs of underperformance and taking steps to address them, you can significantly enhance your investment journey and achieve your financial goals sooner.