Keep An Eye On Your Financial Goals With Mutual Funds

An investor must have a plan in place and more importantly stick with it in spite of the changing market situations. With enough liquidity to support the market, the indices are nearing all-time high levels. Markets remain volatile on the shortto-medium term, but average-out over the longer horizon. An investor having seen the ups and downs of such market remains poised for the long haul and is largely undisturbed with such frequent fluctuations.

- Sanjiv Puri

An investor must have a plan in place and more importantly stick with it in spite of the changing market situations. With enough liquidity to support the market, the indices are nearing all-time high levels. Markets remain volatile on the shortto-medium term, but average-out over the longer horizon. An investor having seen the ups and downs of such market remains poised for the long haul and is largely undisturbed with such frequent fluctuations.

Investors, especially the youngsters should not be too wary about the current market situation. When you are starting out, it’s easier to commit money for long periods, as you have few financial Keep an Eye on Your Financial Goals with Mutual Funds responsibilities and are in a position to take risks with your investments. The other advantage of starting young is that mid-course corrections are possible without any major impact on your portfolio.

And most importantly, mistakes made during the initial days of investing helps one learn the basics of investments that come to rescue in the later stages of life. What course will the market take and how long before it takes a turn again is not something any investor has ever been able to figure out with authority.

For retail mutual funds investors, therefore, here are few things to look at in these uncertain times. 

Stay put if your goals are more than five years away

If the financial goal for which you are saving is at least five years away, it’s better to continue your investments in equity mutual funds. Studies have shown that equities have delivered high inflation adjusted return over long term than other asset classes such as debt or gold. Further, the volatility in short-medium term is higher in equities and hence holding them over longer period helps in easing out the volatility.

Prune equity allocation if your goals are 3-5 years away