We know that in the game of cricket , batsman scores single runs when it is difficult to score boundaries and sixes. Same way, one should continue with small amount of investment when it is difficult situation particularly in stock market and mutual funds. The Systematic Investment Plan(SIP) investors who are investing in good mutual fund schemes for last 5-6 years are experiencing the benefits of the same . One can surely say that these investors are having ‘Achhe Din ‘ nowadays. The SIP investments in maximum mutual fund schemes during last 5-6 years have gained good amount profit.
Recession is the real opportunity for investment.
The reason behind same is very simple. Since year 2008 to 2013, stock market was not doing well and the reflection of the same can be experienced in the mutual fund prices (Net Assets Value- NAV) during the same period. NAVs of maximum mutual fund schemes during this period touched the bottom levels . Some investors became panic and stopped their SIP investments. However , there were other investors who continued their SIP investments without any break. Such investors purchased the mutual fund units at cheaper rates during this period and as a result they have gained good amount of profit.
Some investors started SIPs in more than one mutual fund schemes and developed their own portfolio. This reduced their overall risk as it consisted of Sectoral Funds, Diversified Funds, Index Funds, Thematic Funds etc. By having a proper combination of different types of mutual funds in the portfolio, one can have perfect blend of risk and returns.
What should be the Future Plan ?
Many new investors are getting attracted towards the stock market and mutual fund investments after May 2014. The reason is obvious. After having stable government at the Centre , stock market has started to give good signals and same is being reflected in mutual funds as well. However , investors having plan of minimum 5 years with lesser risk involved should look forward for the SIP investment in good mutual fund schemes. However one should take expert advice while selecting mutual fund schemes for investment. Further , investors can minimize the risk involved by having portfolio of selective mutual fund schemes. To start with , he should reconcile his monthly income and monthly expenses so that he can arrive at the amount of monthly SIP investment . Once this amount is fixed the same should be continued for minimum 5 years to come. As mentioned earlier – a regular small investment for a longer time gives you good results.