With the ongoing global uncertainty of the US and North Korea situation, the financial world continues to remain in caution. Closer to home, industrial numbers are showing slowdown for the last few successive quarters. The sentiment with the FIIs is also that of caution either wanting to withdraw money or are slowing down investments. Markets are therefore more volatile than before. This obviously brings investors to question their investments and wonder as to what should be their next move.
There are two voices in the industry which are coming out clearly. One believes that India will continue to keep doing well, that the government is committed to the growth of the economy and that there would be ongoing positive measures on structural and tax reforms which will eventually help and boost the Indian economy. The second voice is saying “Pause”. With such uncertain times, one should wait and watch for some time. And then once things stabilise take further decisions on their investments.
We however believe that the fundamentals of investing remain unchanged. Allocate funds as per ones risk profile. Funds like balanced funds or dynamic equity funds are suggested as they tend to strike a balance between equity and debt and also change their percentage allocation basis the market conditions. SIP (Systematic Investment Plans)/ SWP (Systematic Withdrawal Plans) are still the wisest methods of investing into mutual funds. One should always remember the cardinal rule of SIP which is rupee cost averaging which happens over investing at regular intervals over a long period of time, hence essentially averages out the cost of investing when the markets are going through cycles of highs and lows.
The AMFI data also substantiates the above mentioned with the robust growth of SIPs in the industry which stood at 1.59 Crores as of August 2017.The industry has added about 86 lakh SIP accounts every month on an average during FY 2017 -18 which goes to support the growing confidence with retail investors on the SIP route of investing into the equity markets.
With the Indian festive season setting in, take stock of your investments, review and renew them as per your risk appetite. We suggest that one should not get swayed by generic negative sentiments just like one should not get overwhelmed by a very buoyant market. Stick to the basic understanding of your needs, financial goals and risk taking ability. Make a prudent asset allocation into different types of financial instruments and when invested in mutual funds, have faith in the professionals who are managing the funds and always keep in mind the original goal set and the time frame planned for a particular investment. While we recommend that one should review his portfolio at regular intervals, we also believe that one should not get sucked into the daily ups and downs of the market and base their decision of investing or exiting basis a single day’s event.
As we celebrate the season of festivals, here’s wishing you and your family a wonderful and prosperous year ahead on behalf of the entire team of L & T Mutual Fund.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.