You get Investment Returns you deserve. Not what you Want or Need!

investment returns you deserve

Looking for high returns from your investments?

You are in for trouble.

You won’t get high returns just because you want them or even if you ‘really’ need them.

You will get the returns you deserve. Atleast under most circumstances.

Investment space is a cruel one. It pays no heed to what you want or need. It simply delivers what you deserve.

Now the question is – what do we deserve?

Let me explain.

When it comes to investing, there are many available opportunities. You can invest in stocks, equity funds, debt funds, bonds, fixed deposits, recurring deposits, real estate, gold, etc.

Some people even ‘invest’ in insurance and keep money in savings account! All in the name of investing… which ofcourse is wrong.

Now all these investment options are very different from each other. These give different returns and are suitable for different time horizons.

So something like real estate is not suitable if you want to invest for just few months or even a couple of years. Similarly, if you want to put away your money for 1-2 years, savings accounts are not the right option. Again, if you want to invest for your retirement, keeping money in FD is nonsense.

As you see, problem arises when there is a difference in the returns you expect and the returns that an asset class can deliver.

  • Savings account won’t give you more than 4-6% returns.
  • FDs won’t give you more than 6-7% returns (that too after taxes).
  • Debt funds won’t give you more than 7-8% returns.

Expecting anything higher than these… is plain wrong.

If you invest majorly in these products (and less in other high return ones), then the low average returns you get is exactly what you deserve.

Talking of returns, a good option for those seeking higher returns are stocks (directly or indirectly through equity funds). Equity funds can give an average of 12-15% returns. But this won’t happen every year.

Lets say you expect equity funds to deliver 12% annual returns in 5 years.

But you would be wrong to expect returns of 12% every year. Investment returns in equities fluctuate and these fluctuations can be gut-churning at times.

So for an average return of 12%, the returns will not be as you expect (i.e. table on left below). But actual annual returns might follow the pattern in table on the right.

stocks returns vs expectations

Both give average returns of 12%.

So no matter how much you want equities to act like bonds and give you 12% every year, equities won’t behave like that. More importantly, equities don’t behave as you want them to. J

You might be tempted to sell your investments after two years of poor returns (8% and -14% in table above). And you might decide to move your money to (lets say) safer FDs giving 7% returns.

What will happen then?

selling stocks after fall

Wow! Straight line returns as you wanted (though just 7%). And very safe! But your average returns after 5 years is mere 2.6%.

What went wrong?

You sold equities when you should have been buying more (Remember Buy Low Sell High).

So the returns you got is what you deserved – that is low!

Had you remained invested (and not added fresh money), the result would have been this:

staying invested long term

You would have got 23.7% annual returns in the 3-year period after the first two bad years. The overall returns would still have been 12%. But you would have made up for poor returns of earlier years in later ones.

Had you invested more during down markets (upto 2nd year), average returns would have been even better.

So the point that I am trying to make is:

  • If you get your asset wrong, your return expectations will not be met.
  • If you get your timing wrong in some assets, again your return expectations will not be met.

When you invest in low-return instruments, you should not expect high returns.

When you invest in high-return instruments, you cannot expect high returns overnight. You need to be patient and you need to NOT sell out at the wrong time.

So you will always get the returns that you deserve.

Investing in the right asset class has the power to improve and dramatically change your life. And investing in the wrong one has the power to ruin it.

The bright side is that if you are not satisfied with the returns that you have got till now, then you can change your future returns.

But it will require some effort from you.

And it is justified. Isn’t it? If you are not where you want to be, then you will not reach there by doing what you have been doing till now. You need to change something:

  • If you want high returns, equity is the right asset class.
  • If you want safety of your investments, debt is the right asset class.
  • If you want to balance safety with returns, mix equity and debt.
  • Don’t expect equity to give you high returns overnight or every year
  • Don’t expect equity to beat debt investments every year
  • But also, don’t expect debt investments to beat equity investments in the long run.

Now having said that, it is quite possible that you are not comfortable with the risk that comes with equity investments. That is perfectly fine. Atleast you know what you don’t like. Most people fail to realize even that.

But then, you should know that returns that you will get from safe and tension-free debt investments will be lower than equity.

This means, that you will have to invest more, if you have a target amount to be achieved in the long term (financial goal).

Lets take the example of people’s retirement savings to better understand this.

Most people’s biggest investment for retirement is their PF, i.e. debt instrument.

Now, generally retirement investments go on for decades.

And we know that for that kind of time horizon, equity is the best asset class.

So if you are young and still invest most of money towards retirement in debt (like in PF), then I can promise you one thing.

At the time of retirement, the amount of money you get from your debt investments will be much lower than what would have been possible had you invested in the right asset suitable for long term – which is equity.

So at the end, you get what you deserve.

You don’t end up as rich as it was possible for you.


Because you chose the wrong primary asset class for your investments.

You get well-deserved mediocre returns.

Charlie Munger once said,

The best way to get success is to deserve success.

Talking of investment success – think about your personal investments.

You might be investing and saving regularly. But is it in the right asset class?

And do you really deserve the high returns that you so desperately want?

1 comment

  1. Hi , Thanks for all your posts. All the posts, case studies that you do are immaculate. thank You!!
    It would be wonderful if you could teach us on selling strategies on Mutual funds ( selling or booking profits ) or changing funds from equity to debt.

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