Coronavirus, also known asCOVID-19, has made a global impact, and its ripples can be felt on the Indian economy. Mutual fund investors are fighting their battle against the strong, disruptive force of this global pandemic. The current meltdown of the Indian market on account of Coronavirus outbreak is making investors think twice about their investment strategies. But as the old saying goes, ‘every cloud has a silver lining, ’There are also many investment lessonsthat we can take from these uncertain times.
If you are an early-stage investor, it’s time to reassess your investment portfolio and consider adding SIP (Systematic Investment Plan)to it. Such an investment plan offers you the flexibility to invest even small sums of money that may suit you instead of a lump sum. You can invest this periodically such as weekly, monthly or quarterly depending on your needs and investment capacity. In doing so, you can take the help of financial advisors like FinEdge that provide dedicated services in helping you make SIP investments. If you have already invested in such a plan, you may consider changingyour SIP investment strategiesto optimize gains once the market recovers in the future.
Here are a few ways we would like to suggest you towards investing in SIPs:
- Review Asset Allocation Periodically
To receive good returns from your SIP investment, keep in mind that you must not put all your eggs in one basket. Diversification is a crucial aspect of investment planning. It works well when you review the allocated assets and rebalance them as per market conditions. Doing this can help you gain profits in case a particular asset class fails to meet the expectations.
- Consider Your Risk Profile
Every SIP investment decision is made based on two fundamental factors –return and risk. While you may expect higher returns from your investments, you also want to avoid risk as much as possible. Since the returns from mutual fund investments are market-linked, it is crucial to check your risk profile. By doing this, you can find the right instruments you should invest in.
Also, keep in mind that the risk profile or the ability to take risks varies from one investor to the other.
- Be a Prudent Investor
While investing through mutual funds, an element of risk or uncertainty always exists. One way to minimize risk is by making calculated SIP investment decisions. In these challenging times, it is best not to fall prey to rumors about market conditions that tend to arouse fear. Instead, ask for help from financial advisors to analyze your investment portfolio and suggest the right measures.
- Correct Investment Mistakes Made Earlier
Many investors tend to stick to their investment mistakes for no good reason. For instance, some people stick to underperforming funds for a long time, even after knowing the investment will not work the way it should. Similarly, many DIY investors continue making wild guesses and invest money randomly.
If you have realized you made some SIP investment mistakes, it is time tohire a financial advisor to help you make the right decisions. This way, you can understand what went wrong and why you have lost money.
You can consider the current market condition as an opportunity to correct such mistakes and start over with a clean slate.
- Invest as Per Your Financial Goals
Given the uncertainty about how things will unfold in the coming days and weeks, you might be worried if you should continue with SIP investment or not. The simplest answer to your worries is not to panic. If you want to fulfill your long-term goals, keep investing via SIP as you can buy more units at lower NAVs (Net Asset Value). It will help you create a bigger corpus for the time ahead. Make sure you get all your investment decisions approved by a financial advisor.
As a mutual fund investor, keeping the fundamentals of investing in mind is of utmost importance during the COVID-19 crisis. Your style of investing may be different from that of others, but the fundamentals remain the same. Think of COVID-19 as an opportunity to learn how to steer through tough times with the right investment decisions.