If you are reading this article, chances are investing in mutual funds has a portion in your monthly income. As a conservative investor who is investing monthly in Systematic Investment Plan, is feeling distrust after losing money every day since the market started correcting and the investor is getting anomaly in habitual returns. The anomalies in habitual returns have created havoc in minds of the mutual funds investors reasoning that either “I should stop investing in SIP’s till the volatility in the market get steady” or “ I am not made for getting returns from the markets. Questions like these have been talk of the town after market correction.
The anxious investor is now looking for alternative investment avenues where he can park his surplus funds that were meant for investing in systematic investment plans where his actual returns are deviating from expected returns.
Here are some options:
- Bank Deposits: Majority of the residents in India still favor to park their savings in banks to earn plain vanilla interest rate. Looking at the parameters of security and liquidity, the investor is nonchalant but as the sight goes by to interest rate, they are crediting pennies against thousands.
- Debt Mutual Funds: Investors who don’t want to take risk, hate to see their portfolio in red and wishes a certain income would invest in debt mutual funds believing that the company will pay their debt in case the company wind up. But IL&FS default saga and crisis in NBFC’s are projecting a dark shadow on debt mutual fund. TATA money market fund saw a dip of 5.94% dip in its NAV in October as IL&FS failed to repay commercial papers dues.
- Gold ETF: Indians love Gold. It is difficult to find someone who lacks interest in Gold. Gold ETF is open-ended scheme in which money injected by investors is invested in Gold. These ETF’s offer a convenient means to invest in precious metal without any hassle of storage and worries of threat. But it is important to note that value of Gold ETF relies upon Gold prices. It cannot outperform when prices of gold is declining. The pessimism is high, in times when bulls are ruling the market and US Dollars.
- Average Equity Mutual Funds: Investing in Growth Equity Funds always comes at a cost. Cost of Investing in equity funds is volatility. There comes a time when an investor will find that the value of his units is less than the amount invested. But, it is imperative to note that market is not going to end ever. Indian Economy has seen sharp corrections like 1992 Harshad Mehta scam, 2008 Housing Loans crisis, 2015 and 2016 China’s Yuan devaluation but strong conviction of investors in markets always fought back and push index to a new high.
In high volatile circumstances, when FII’s are selling and no positive news is likely to flash, conviction comes from quality of management and their strong product line.
- Oil marketing companies are not going to shut down their petrol pumps.
- Non Banking Finance Companies are not going to deny for loans.
- Aviation will not fly empty.
- Banks are not going to deny on your deposits and withdrawal.
- Auto sector is not going to stop manufacturing commercial and personal vehicles.
- IT companies are not going to stop providing services to USA and European countries.
- FMCG companies will not stop producing non-durable goods.
Markets have a tendency to correct after bull Run not to crash. The seeds for next upside rally are silently sowed in times of correction and it always follows its primary trend that is higher highs formation.
- Don’t panic and redeem.
- Stay tuned with your Systematic Investment Plan.
- Be brave and average your investment in equities.
- Diversify your capital in various funds.