Markets are never consistent, sometimes they go up and sometimes they go down. So, when the markets are up, the value of the people’s investment goes up and when the markets are down, the value of the people’s investment goes down. Most of the mutual fund investor who seek a higher return invest in equity mutual funds. An investor who puts money in equity mutual funds are always exposed to the market day to day movement. These mutual fund performances depend upon the performance of the equity market or the stock market. Despite the impressive track record, equity mutual funds are still viewed with suspicion by many segments of the retail investment community. Most of the time, people panic when the value of their investment in a mutual fund considerably goes down over a period. The most obvious response of early investor is to quit the market. But It’s not a great investment strategy, one should remain invested before making any early judgment. Here is what one should do when the markets are down:
- Don’t Panic
One of the basic rules of investing has been to never get too excited or panic in any condition. This is the absolute first step of investing. Most of the investors start selling after seeing a high drop in the stock market and they start buying when they see rises in the prices.
- Market Condition
Before investing in any market, it’s better to look for the market condition. There are many cycles of the market either it’s in bull or bear. When the market is in bull, most of the fund will perform better, but when the market is in bear, almost all equity mutual funds will perform poorly.
- Evaluation of Strategy
Any investment always goes through various cycles. It’s always better for an investor to keep looking at the market performance periodically. It’s better to keep evaluating your strategy after a certain period. In case, if an investor thinks that returns are quite low and can afford high risk allocation, then it’s better to invest in riskier mutual funds. If, however, an investor doesn’t like to take much risk then it’s better one should consider less risky mutual funds which provide a stable return.
- Performance Comparison:
Before investing in any fund, it is always advisable for an investor to look out for its past performance. Then compare the fund performance with other funds in the same segment or category. For example, if an investor wants to invest in a long-term equity fund, then it must look out for the other funds in the same category and its performance over the same period.
An investor should not take off the money, just because the market has performed poorly. One must look for various factors before any redemption, one of the crucial factors to consider is exit load. So, if an investor has redeemed before a year of investment, then they attract an exit load of 1%. But in case if the investor has redeemed after one year, then an exit load will be null in most funds.
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*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.