Risk and return: Make the right trade-off

An SIP in an equity fund can reduce the average cost of investing and boost return. But it can't eliminate the risk of loss of principal

I was talking to a prospective client, Mayank, a 55-year-old self-employed professional, who wanted to invest for retirement. He is a self-proclaimed conservative investor.  “I do not want to take undue risks and I intend to invest for 10 years or more,” he said. All good so far. But his next statement floored me. “My return expectation is only 10 per cent.” He made it sound like a very reasonable expectation. 

I asked him how he had arrived at this “reasonable” expectation. He reply was vague. But in a nutshell, it was, according to him, a reasonable step down from