We all invest to earn good returns. But the market does not work according to our wishes. There are times when your interest rates go up and come down drastically. If you want attractive returns from your investment, especially mutual fund systematic investment plans (SIPs), you must know about these three invisible enemies that can gobble a major share of your return. What are they? Read on to find out.
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SIP investors, take note of the disappointment phase
For every mutual fund investor, there is a disappointment phase where investments give 7 to 10% returns. It is natural to say I expected ‘far more’ when your investment dips to this level. After all, we all invest in mutual funds to earn more than 7-10% returns.
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Here is the next phase: ‘An FD would have been better’
The next phase a SIP investor needs to withstand is the irritation phase where investment drops to 0 to 7%. It could be more frustrating than the disappointment phase where you even question your investment decision. You can even think that an investment FD would have given more return than this. But, don’t lose hope.
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Mutual fund investors: Don’t be afraid of negative returns
The next phase is the panic phase or negative returns where the value of your portfolio goes lower than what you had expected.
These are very common and happen to almost every SIP investor during the initial years of investment.
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What mutual fund investors should do?
The only thing that you need to do is to sit tight and wait patiently. History markets have always recovered after a sudden drop and moved up in the long run. Further, this downturn will give you an opportunity to accumulate more mutual fund units that will participate in the market recovery and give you some extra return in the long run.
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Mutual fund investment: How long should you stay invested?
Don’t pause or exit SIP. Wait patiently even if it takes one to three years. Mutual funds usually give you an attractive return in the long term. No matter what you have to stay invested for at least seven years. The more you can stay invested, the more return you will get.Source: FundsIndia SIP Conversations 2024
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