Mutual fund investors, especially those who are new to participating in a mutual fund scheme, may be alarmed by the status of the stock market right now. Young investors may not have experienced this kind of market volatility, and it has made them wonder if they should stop investing in mutual funds and withdraw their money from the stock market. Making a hasty decision, though, could mean that the years of work you have put into saving will actually be for nothing.
Making an informed choice is essential to ensuring that your investments are successful and that you don't lose out on any of the market's advantages. It might be very difficult to handle the finances in a falling market. SIPs (systematic investment plans) appear to stop and redemptions seem to increase, both fairly prematurely, during volatile times. According to behavioural experts, investors experience losses more strongly than gains. When the markets enter a bear phase, people frequently cancel SIPS or redeem their investments to avoid suffering any further losses. But if you are a long-term investor, volatility is your friend.
Investing the SIP Way
To instil financial discipline through frequent investments is one of the main benefits of investing through the mutual fund SIP route. This fundamental goal is defeated if you stop your SIP in a declining market out of fear. Your wealth will decrease if you pause or stop your SIP, and you won't be able to reach any financial objectives you may have set for yourself. Avoiding market timing is a key factor in choosing the SIP method when investing in the equity markets.
This story is from the November 07, 2022 edition of Dalal Street Investment Journal.
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This story is from the November 07, 2022 edition of Dalal Street Investment Journal.
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