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POSTED BY ON November 7, 2011 4:59 am COMMENTS (3)
I have been investing in mutual funds via SIP. Due to europe crisis and other global market factors, many experts are predicting that we will enter slow growth and volatile phase for next 1 or 2 years in India.
Should I continue investing in mutual funds in SIP? As an alternative I can put the same money in FD and get 4 to 5% after tax return for sure for next 1 or 2 years rather than going in negative by investing in volatile market.
Any inputs, suggestions will be greatly appreciated. Thank you
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Abhishek and thezionview have expressed the fact that if you need the money in 1-2 years do not go for equities. Bang on!
Now lets assume Aam investor wants to stay long term and wants to beat the market by being in FDs for 1-2 years then put the enhanced corpus in MFs. The problem really is this Aam investor: We just do not know when the markets will come back up big time. When the markets go up they do so in a very short period of time (days and weeks), stay there, sway a little and then make the next move (up or down, who knows). You can never time the market whatsoever. If you are in for the long term continue your SIP and every day the market falls 300+ points, for example, pump in another couple of thousand rupees into the MF. That way you can tell yourself that you bought the units cheaper everytime you enter the market. However let the SIP run through.
NOTE: If you say you have timed the market before and succeeded it is one of those coincidences, thats all! It can never be consistent.
The Very purpose of SIP is this..ie to get maximum out of turbulent times. To Stop the SIP would be the stupid thing to do.
On the other hand if your looking to use the money after 2 years then You should not be in equities in first place. Instead put it in a good return giving FDs
Hello Aam Investor,
You need to be clear why are you investing. IF you want to invest for 1-2 years, you need to stop your sip and also redeem your money as well.. Equity needs a longer time horizon.
If you really are a long term investor, dont watch news channels and increase your SIP to take advantage of this crisis.
Happy Investing !
Regards
Abhishek