I invested Rs 36 lakhs in mutual fund in various funds in October 2021. Not giving giving much returns. What to do.
First of all Mutual funds are for 5 to 10 years not less than one year. But to answer this question we need to know 4 basic things;
- Why did you invest
- What’s your strategy
- How long you wanted to invest
- What’s your risk taking ability
At that time the market was at peak. Market down by about 8-9% since then. Returns may be negative. Hold. In October 2021, the Sensex was at 60K and now it is at 57K. So an effective reduction of 5%. How are you comparing your returns? What was your expectation? If you cant accept a 5% swing, may be you shouldn’t invest in equity. Instead of asking which is the best fund to invest, read a bit about how market can be volatile and what you can do.
You have just invested and that too lumpsum. Mutual funds are supposed to be for long term and ideally one should not invest in lump sum. Wait for at least 5 years. Equity Mutual fund investing is for long term, don’t expect returns in few months that too when markets are consolidating. Market has already given solid returns in last 2 years. So, this year may go in more of consolidation than good returns. Wait for 3-5 years at least to see good rational returns provided you have chosen some good funds. Its a long term journey hold tight and stay calm.
What to do when Mutual Funds Invested Not Giving Promising Returns
Looking for mangos after 8 months is too early where as looking for tomato after 8 months is too late. It’s the objective that matters. 2022 is not looking good for equity market. Bull market is over now and we are about to enter into bear market.
Another reason is that the whole market did not move much. It is likely you have invested lumpsum in equity funds close to the market top. Firstly it’s Mutual Fund not Aladdin’s lamp to be amazing… Secondly while investing you might have surely researched about the fund and might have decided a tenure for the investment.. Be disciplined… Review of Fund performance need to be done annually only. If still not satisfied contact your FOF and he can help you with the funds
Tip: if you have changed your mind to about the ability to handle market fluctuations in the last 6 months, you can do one of the three options, third being the best.
- Move funds to debt and do STP
- Move all funds to asset allocation based funds like BAF, it is not yet too late
- Sit with a financial planner and chalk out a plan specific to your mindset and risk bearing capacity.
BAF if balanced advantage fund. Go to the coin website and explore equity +debt fund. They do the asset allocation for you. Please read and understand the pros and cons before going forward.
There are only two scenarios when you should invest in lumpsum
- You don’t care where equity markets head in short term as you will not pull out the money. Please check your definition of long term before you invest
- Wait for decent correction of minimum 10% from ATH, and invest. This way you are at least not stuck at high prices. The long term rule still applies, albeit you may get satisfaction of some green ticks.
And if volatility is not something you can comprehend despite trying, stick to boring sip.