The market is tumbling and is investors’ confidence. Especially the retail mutual fund investors who are wondering about what to do with their mutual fund portfolios.

Live TV

Loading...

This is a classic situation where investors hit the panic button on seeing their investments erode value. They lose their sleep and end up taking irrational decisions. So, should you worry about your existing mutual fund portfolio in the current situation? The short answer is, no. If your mutual fund portfolio was designed keeping your long-term financial goals and risk profile and as long as you are invested in a well-diversified portfolio, you should not worry.

In fact, you should take this correction as an opportunity for creating wealth in the long run. So, rather than worry, you can think of starting an SIP (Systematic Investment Plan) today or may well use the mutual fund’s STP (Systematic Transfer Plan) route for investing in the market at a gradual pace as the market is expected to remain bouncy for the next couple of months.

But, the general tendency among investor is to start panicking about their existing portfolio rather than thinking of increasing their investments. This happens despite knowing the fact that buying at low and selling at high is key to wealth creation and the current market situation is a boon to create a portfolio of a lifetime. Hence, do not worry about checking your mutual fund performance frequently unless your investment was not made based on a comprehensive financial planning.

If you have done your financial planning well in advance and your mutual fund portfolio was based on achieving your realistic measurable financial goals and your goals have not undergone any changes, then there is no reason for you to worry. Do not worry as long as your financial goals are aligned to your risk profile and your investment was made to create wealth in the long run and not for a quick gain in the short time say a year or two.

In fact, any mutual fund investor doing SIPs should not worry because the rupee cost averaging concept can make money in the long run which is basically buying at a lower price end during market correction and investing less when the prices are high. If you are really worried about your portfolio then sit with your financial advisor, in case you have one and seek his or her professional help for a review of your portfolio to re-assess the impact of any negative market conditions. The role of your financial advisor is to hand hold you during the time of any crises and the same will never arise if your financial plan was made in the first place and executed well looking at your risk profile.

This is a time when you should be ready to invest the idle cash which you may not need it for the next couple of years.

Rishabh Parakh is a chartered accountant and chief gardener at Money Plant Consultancy.

First Published:Oct 9, 2018 7:18 AM IST