Mutual Funds Sahi Hai ? Giving negative returns, here is how you can turn them positive.

At this juncture nothing can be more tormenting than starring at your Mutual Fund Returns as all of them show red mark and negative returns. It’s by nature that the immediate thought that provokes is- Why I ever invested in MFs? Which propels to further bewildered questions or queries like-

• Should I stop investing more amount?

• Should I withdraw my investments and book losses immediately?

• Should I continue to hold my investments? If yes, how long?

Let’s pick each one of these questions and figure out out the solution.

Should I withdraw my investments and book losses immediately?

Or

Should I continue to hold my investments? If yes, how long?

History can come handy and past can show the path.

Here in the below table where I have calculated average category returns of four different schemes- Large Cap, Mid Cap, Small Cap, and ELSS- comparing their returns over multiple time periods.

You can clearly see that in spite of having huge one year negative returns, it changes positive over a period of 5 to 10 years for all sort of schemes. This means that if you had invested in MFs five or ten years back, then even in this phase of Corona Crisis, you would have earned positive returns.

It is advisable that if you don’t need money urgently, you should not book losses at this point. You should remain invested and stick to your scheme. You may see positive or even good returns cropping up once the corona pandemic is contained. But it may take quite a long time 1-3 years.

Have patience, remain invested.

Should I stop investing more amount?

Never try to time the market, unless you are an expert.

There are generally two ways you can invest in MFs:-

• In Lump sum

• Through Systematic Investment Plans(SIP- say a fixed amount of money every month)

Investing in lump sum is a way to smack your own leg. If you are in habit of making lump sum investments in MFs, stop it immediately.

Here is the way, continue with or shift to Systematic Investment Plan. Using SIPs you can invest specific sum at regular intervals (say Rs 2000 per month for next 5 years), thus diversifying your investment across multiple periods. This is the safety net that a common investor must use to protect himself from market’s volatility.

Let's see an example.

If you are having SIPs going on, continue with it. In long term, it would turn out to be in your favour.

Why I ever invested in Mutual Funds ?

Don’t repent your decision

Due to corona pandemic markets globally have seen a severe downfall, and mutual funds are in a way replicating the same. Once situation improves, though it may take time, market will rise, so as your investments in MFs.

Remember,

Patience Pays

For more such useful information, SUBSCRIBE for free.

If you find it enriching, kindly LIKE & SHARE.

With full modesty and smile,

Thank You for your love and time.

Disclaimer:- The information should not be taken as any investment advice. It is advised that you make necessary research before taking any investment decision.