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POSTED BY ON April 4, 2013 2:30 pm COMMENTS (3)
I have been thinking to invest in MF for long term goals say more than 15years like
But I was paranoid that when that event happens if market is down I would in loss money inspite of waiting for such long term. I understand that as a theory long term investment in equity outperform other investments like FD , I think there is no guarantee for this. have also read that last 9 months outflow of MF is continuously higher than inflow ? what do you think ?
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Dear Praveen, how can the events of last 9 months impact the 15Y away thing? Please clarify.
Thanks
Ashal
The markets have taken a beating and there can be no better opportunity. You can not factor uncertainty in any market situation. Instead of timing the market, adopt a staggered approach to investing – the best option being opting for SIPs (in case you are interested in investing through MFs).
It is a great time to invest. Any time is but especially now with the sensex plunging everyday.
equity investing should be done in the following way. Say your goal is 15 years away.
For the first 10 years or more you should invested in about 60% equity and rest in safe debt instruments. Then from year 11 you should gradually start shifting from equity to debt. By year 12 you should have zero equity. So your money is safe when the event happens.
No guarantee for anything in life. Each of those 10 years you should rebalance the portfolio each year. That is equity is doing well and has more than 60% weight shift some to debt and bring down to 60% and vice-versa for debt (wrt 40%)
MF outflow is because people don’t understand the nature of equity investing. Volatile returns is the only way to outperform inflation.
So invest, stay invested and don’t look at the sensex each day.