What Mutual Funds Can get me Rich Quickly?

What are Mutual Funds? Investopedia explains mutual funds as a financial vehicle that pools assets from shareholders to invest in securities like stocks, bonds, money market instruments, and some other assets.

Mutual funds are usually operated by professional money managers, who allocate the fund’s assets and attempt to make capital gains or income for the fund’s investors. A mutual fund’s portfolio is maintained and structured to match the investment objectives stated in its prospectus.

How to invest in mutual funds

The world is moving a lot faster towards convenience and these days everyone is trying to avoid the complicated and instead opt for the simple. The days involved in filling out applications and wading right through multiple pieces of paperwork before bringing in mutual funds to your investment portfolio that is far behind us.

Now, you get to invest in these funds straight from the comfort of your home. Some apps enable you to directly invest in these funds just with your smartphone. Cowrywise, bamboo, and piggyvest are among the most popular options available out there.

Typical Mutual Fund returns

In investing, the returns are usually proportional to the risk. For example, cryptocurrencies promise one of the highest upside potentials but also it has the easiest path to financial ruin.

Mutual funds on the other hand are not promising massive returns but do not have a very steep downside potential. Most mutual fund operators have a maximum drawdown that is defined clearly in the investment prospectus.

Let’s have a look at the highest-performing mutual funds in Nigeria at the moment:

Stanbic IBTC absolute return fund ytd 6.86%
Stanbic IBTC aggressive fund (YTD 49.9%)
Stanbic IBTC balanced fund (YTD 26.75%)
Stanbic IBTC bond fund (YTD 3.65%)
Stanbic IBTC conservative fund (YTD 19.84%)
Stanbic IBTC dollar fund (YTD 5.39%)
Stanbic IBTC enhanced short-term fixed income fund (YTD 7.03%)
Stanbic IBTC etf 30 (YTD 35.32%), Siaml pension etf 40 (YTD 52.24%)
Stanbic IBTC ethical fund (YTD 34.03%)
Stanbic IBTC guaranteed, Stanbic IBTC absolute return fund (YTD 6.86%)
Stanbic IBTC aggressive fund (YTD 49.9%)
Stanbic IBTC Imaan fund (YTD 41.18%)
ARM aggressive growth fund (YTD 11.4%)
ARM ethical fund (YTD 7.2%)
ARM Eurobond fund (YTD 1.72%)
ARM money market fund (YTD 13.01%).

As seen, typical returns for most funds are usually between 4-15% but some funds return as high as 50%. However, aggressive funds carry a much higher risk of exposure.

What Getting Rich Quick Mean

A lot of people mistake getting rich quickly as easily getting rich. While it remains possible to get rich in a short time from just investing, it also seems impossible to get rich easily. Getting rich slowly is treading the normal route which involves getting a job, working for 35 years, and retiring with a gratuity and just enough for you to get by.

Getting rich quickly is making the process shorter. Through a high-paying career starting and selling a business, creating solutions solving problems, etc. as stated by Statista, 50% of the 3194 billionaires worldwide are aged between 50 and 70. And Yes, you can get rich with a lot of time left for you to spare. Getting rich is a process and a lot of us today see it and neglect the process.

Wealth accumulation and wealth preservation

At this stage, what are you trying to do with your finances? Are you looking to preserve your wealth, or amass as much as possible? Understanding the differences is very important and can eliminate all the unnecessary stress.

Let’s say, if you carry out your day-to-day world and struggle to go by, then your goal should be exponential wealth growth rather than wealth preservation because, in reality, there is nothing for you to preserve.

The irony is when people who barely have enough to save or even invest think they can make a killing by investing in treasury bills for example. At the end of the day, they get disappointed when they find out that these vehicles simply preserve wealth and do not accumulate the wealth they want.

Why You Can’t Get Rich Quick with Mutual Funds

You need to know that saving can never get you rich. Let’s say you earn 2M a year, and you save 50% of your earnings, that would be 1M per year. Meaning, to save 100m, you would need to keep on doing this for about 100 years.

Let’s say you chose to invest in a mutual fund. Every year you sink in around N1m and the fund returns on average a 5% ROI yearly, it should take about 94 years to make around N100m. for context, according to Statista, the life expectancy for males in Nigeria is 52 and 53 for females. So what this means is that to secure wealth, you would need at least two lifetimes.

How to Take Advantage of Mutual Funds

The basic truth here is that the rich never got wealthy from investing in mutual funds. Most of them did so by starting a business, and growing exponential wealth, then and only then did they look into other options like mutual funds and treasury bills.

With the previous example, let’s say you start compounding your wealth with mutual funds at N100m, in about 10 years, you would have made around N62m.

The compounding effect that deals with investing in mutual funds and the like only makes sense when you have a very large capital.

Building your Financial Nest

There are several ways to get this done, and they include an inheritance windfall, a very high-paying career, a high-paying career, settlements in the form of gratuity or legal payoffs, unusual financial gains like winning the lottery, and exit from a business.

If at the moment you have a low-paying job, you should look to upgrade your CV and seek much higher-paying alternatives. Also, you could turn to some other investments for small returns that would offset expenses and bill payments. The important thing to note here is that you are not getting rich from it.

If you have a business at the moment, you should be looking at scaling the business. Two stores are better than one and ten are better than two. Research on new ideas and ways to leverage the internet to reach more customers.