Mutual fund investment | Wealth Investing: What Mutual Fund Investors Can Do to Protect Their Wealth
Almost all categories of equity mutual funds experience short-term losses. According to Value Research, all major categories of equity mutual funds posted losses in the three months. Thankfully, the carnage has yet to impact long-term returns. Apart from funds in the banking sector which lost 6% last year, all other categories of shares are still profitable.
If that makes you nervous, you might be up for some sermons from us. Sorry, even at the risk of sounding like a blocked disk, we must remind you of certain points in order to reassure you about your investment projects.
The most important thing you can do right now is to do nothing. Remember that the situation is changing. Of course, you can’t help but weigh various outcomes. However, you may know that these are possibilities. Even if any of your assumptions come true, the results may not be predictable. The fact is that it is very difficult to make changes to your investment plan based on the current situation. The results may not be what you imagined them to be.
What can you do in the current situation? First, you can accept the current situation and tell yourself that the whole market is down. For example, the key index – S&P BSE Sensex – went down to 53xxxx from 62.xxxx points which it scaled to xxx. It clearly tells you that most of your investments will also be affected by the market downturn.
You may also tell yourself that you cannot avoid such bad phases when you invest in shares for a very long time. You can also tell yourself that such phases won’t look so bad when you look back after a decade or two. In fact, it’s what helps many seasoned investors ignore short-term volatility and stick with their investments.
You can also take advantage of the current market downturn to reevaluate your investments. Have you made any investments that you are not so sure about now? Or you think you have assumed that you have a very high risk tolerance, which may not be true. Such an evaluation is a very important learning process. You can’t do anything about your investment plan. Or you can reduce your investment in risky options and allocate more to safer investments. However, you should not ignore these learnings. Otherwise, you risk repeating the same mistakes in the future.
Always remember that your behavior during a crisis situation like the current market scenario may force you to make mistakes which may prevent you from building wealth. Unless you identify your mistakes and learn from them, you will make the same mistakes again.