Funds With Returns Less Than Term Deposits

[junkofdavid2]

Many funds available, whether in Thailand or Farangland, have a long track record of returns being less than SAFE fixed term deposits, despite these funds NOT being risk free.

Just wondering, why do people still buy into them?

Am I missing something?

I can only think of some possible reasons:

1) They are marketed better, and the fund salesman wears a nice suit and makes the customer feel important and makes the customer feel like a "high net worth wealth investor".

2) If feels cool to tell your friends to say "I've invested in a fund" rather than to say "I deposited in a bank."

3) The customer feels that by luck, the fund could suddenly earn much higher profit than the term deposit (despite the fund's low profit track record, and despite the fact that there are other funds available with better track records that he could have bought instead)

4) Or maybe I'm missing something? Maybe there's some other benefit which I'm not aware of?

I'm not bashing these funds... I just want to know if there's something I'm missing about them which makes them beneficial?

[bmanly]

Many funds available, whether in Thailand or Farangland, have a long track record of returns being less than SAFE fixed term deposits, despite these funds NOT being risk free.

Just wondering, why do people still buy into them?

Sometimes people don't tell you everything. What usually happens is that they bought into a product some years ago and was promised high growth with some income. The salesperson says things like "in history it has been proven over and over that in the long term these funds will always out perform term deposits". The punter wants to make his money work harder, believes the rep and buys it.

Some years later the punter finds himself scratching his head saying to himself why hasn't it gone up like the sales rep said it would? Sometimes they find it too hard to admit to themselves that they made a mistake and they fail to cut their losses.

I can show you several managed funds that have gone backwards over time, even after 7 years. I have been a victim of 2 such funds over my life as well but I only put small amounts of money in them and it only caused minor damage. I did however learn from this experience, I don't invest in managed Funds any more, I buy direct on the stock market now.

So to answer your question, why do people still buy into them (even say after showing a 7 year loss)? Probably people don't, but that fund is still there keeping those hanging in there, hoping and wishing it will go up. The fund still has a customer base with investments and still has to report and still gets listed in the financial papers all be it showing a loss.