For every financial goal, you must have a certain date and a financial plan to achieve the same. A good way to achieve to your financial goals could be investment in the equity markets for a prolonged duration through a systematic and disciplined way of investing. SIP or systematic investment plan offers investors with the disciplined route of investing in mutual funds. Different investors have different investment goals that they wish to achieve in their life. Some examples of financial goals could be saving to buy a car or a new house, planning a family trip, investing for your child’s bright future or marriage, retirement, etc. Since each financial goal is associated with certain costs, it is important to draft and implement a proper financial plan to help you achieve the same.
The Covid-19 pandemic has severely impacted the sentiments of investors all over the world. According to a recent data published by AMFI (Association of Mutual Funds in India), in May 2020, the ratio of discontinued SIP investments as opposed to new SIP investments reached a new record of 81%. As opposed to the 6.5 lacs discontinued SIP investments, around 8.1 lakhs of new SIP investment accounts were registered. What does this mean? This proves that despite the difficult times, investors are still keeping their faith in SIP investments.
What should you as an investor do in these challenging times?
The Covid-19 pandemic has affected the stock markets worldwide, which also comprises of the Indian stock markets. In these challenging times, an investor is often left wondering if they should stop with their SIP investments or continue to invest in mutual funds through SIP mode of investment. As you might have heard from your friends and financial advisor, some volatility is a part and parcel of each markets. In fact, it is this volatility that provides you with the golden chance of buying mutual fund units at lower costs through the concept of rupee cost averaging. This is why, experts advise investors to avoid any knee-jerk reactions towards their mutual fund investments. They further advise investors to no get swayed with the market sentiment and trust their investments. An investor must try to continue with their SIP investments. But what if, you are faced with some financial emergency that requires to re-think your investment strategy? Well, in such circumstances, rather than entirely stopping your SIP investments, it is advised to pause your SIP investments for a while (until your financial condition improves). You can also choose to reduce the SIP investment amount in lieu of your current financial situation. You can also use an SIP return calculator to understand the future value of your mutual fund investments.
Staying invested in the markets during such times can aid to contribute to the upside when the markets begin to gradually recover. A good investor is one whose investment goals does not change according to the market situation. Till then, keep holding your SIP investments, and have faith in them. Happy investing!
