Posted On Wednesday, Aug 26, 2020
The lockdown may have impacted your investments.
In hindsight, the market crash was nothing more than a bump in the long journey to wealth creation.
Today we discuss why this time is as good as any other to kick start your SIP engine to life.
Yes, it's not too late!
It is certainly possible to revive your financial goals, regardless of any market situation.
So here we present our SIP prescription for you to accumulate wealth for your financial goals.
Job losses, and salary or business income cuts have pushed many to rethink their SIPs.
Of course if you have any of the above problems, your primary focus should be on ensuring your emergency corpus is solid.
Shore up your corpus such that you have at least 12-18 months' worth of living expenses.
If you have planned well, then still try and continue your SIPs by cutting your expenses.
If not, once you have an emergency corpus in place, resume your SIPs to accumulate wealth for your financial goals.
It's great if you have faced little or no change in your income. In this case there is no reason that you shouldn't continue your SIPS as before.
In fact, given the opportunities around, you could consider cutting back on expenses and squeezing out extra cash for another SIP.
If your portfolio is exposed only to equity mutual funds, then consider adding some liquid funds. This will diversify your portfolio and allow you to raise money for short term goals.
Gold is a popular choice when it comes to diversifying portfolios. During times of market volatility gold prices generally go up when the markets are down. Consider allocating 10-15% of your portfolio to Gold.
It's true that volatility in recent years has tested investors' patience.
But this doesn't imply that you should stop or redeem your SIPs. Remember that patience and tenacity are the hallmarks of wealth creation.
A better course of action would be to keep your expectations in check.
In a down market, expecting higher returns will only demotivate you.
And if you are invested in SIPs, you don't need to time markets or decide every month where to invest.
Simply continue your SIPs as before.
Continuing your SIPs at the same level means buying more units when markets are down. This also brings down your cost of acquisition.
For example let's say you have 7 to 10 years to achieve your goal. In this case, allow the portfolio to recover its value, and don't disturb your SIPs.
Holding on to your nerves is difficult when you see markets slipping to new lows.
The very action of committing to an SIP removes the need to identify market peaks and bottoms.
It also gives your portfolio the chance to benefit from the volatility.
Consider redeeming investments in falling markets only in truly extreme situations.
Even if you have no choice but to redeem, consider all other options first.
In conclusion, to be able to reap benefits when markets do recover, it is important to remain invested.
Editor's Note: Want to know more about starting or re-starting an SIP with us? You can write to us at [email protected] Or give us a missed call at +91-22-68293807 and we will call you back.
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Please visit – www.QuantumAMC.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
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