As you may know, timing the market can sometimes prove to be futile even for seasoned investors, due to the uncertainties related to the financial markets. You can invest using an SIP or lumpsum mode of investment. With an SIP route, you need not worry about the right time to invest. Investing a small amount in Equity Funds regularly can help you average out your investment effectively over the long term. Irrespective of whether the stock markets are up or down, investing in a diversified equity portfolio as per the tried and tested 12|20:80 Asset Allocation Strategy can help you sleep a peaceful night’s sleep. Investment in equity funds requires careful consideration of your risk tolerance, time horizon, and envisioned financial goals.

You need to allocate the right amount of funds to equities, fixed-income, and other asset classes in your investment portfolio to fulfil your long-term and short-term needs. If you have a short-term investment horizon, you can consider debt funds such as liquid funds as part of your portfolio. These funds invest in securities with a maturity of not exceeding 91 days only. These funds also take care of your emergency needs as it offers flexibility to redeem as required and do not carry exit loads if you redeem after a week. However, for long-term investment horizon, you can consider balancing your portfolio with equity and gold mutual funds.

Generally, horizon of at least 5 years can be considered when investing in equity mutual funds. Avoid tapping into your investments meant for long-term goals to meet your short-term needs.

Some investors start their investment journey looking for short-term returns. Long-term investments are more likely and capable of coping with market fluctuations. Over the long term, your portfolio can overcome short-term risks. Let’s understand the benefits of long-term investing: 1. Power of Compounding: Long-term investing helps you to gain from the power of compounding and helps to achieve your long-term goals. 2. Lower Downside risks: When you are invested for a longer tenure, your downside risks are lowered, thereby offering you the potential for risk-adjusted return. 3. Keep emotions in control: Equity markets can be prone to fluctuations over the short term and thereby can lead to some poor decisions. However, a long-term investor with prudent asset allocation remains unfazed and manages to keep emotions under control even during market ups and downs.