How correction in stock market can be good for your investments?

The recent market volatility has been sending jitters to the investors and many of them are making hasty moves and losing their hard earned money in the process. However, contrary to what you may feel market experts predict that the correction in the stock market is perhaps the best time to invest in mutual funds. Here’s why we believe so:

The market is pretty settled now owing to strong statements made by the RBI, SEBI and the finance ministry. RBI’s open market purchase announcement affirmed the fact that those at the helm are willing to step in and ensure market stability. Secondly, the local macro factors are not as bad and therefore this is just a market correction and not a bear market.

Talking about the mutual funds, the mutual funds invest their funds in premium quality companies that are fundamentally strong. So, when the stock market is in the correction mode, don’t panic and don’t stop your SIPs please. In fact, this temporary phase gives you an opportunity to purchase more units with your SIP, helping you to average out at a lower cost.

Next, perhaps you may want to revisit your risk appetite. If you’ve set aside funds to tide over any emergencies, it would be advisable to stay invested. Also, since the NAVs have taken a hit, you could also consider investing in mutual funds. You can choose a mutual fund that’s not as badly hit as the others. This could primarily because of the strong investment philosophies of the mutual funds that it didn’t face the brunt of the volatility.

In addition to your current investment in mutual fund schemes, you should also explore investing in different schemes such as fixed income funds, balanced funds, specialty funds and more…

While past performance does not guarantee future results, it does give you an idea about potential earnings. More or less, mutual funds happen to be less risky proposition and if you stay invested for a period of at least 5 years, the results can be excellent.

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