It would help if you took a serious note of the nature of the capital market (it includes both #fixed income and #equity) and the reasons for asking you to have patience and optimism.
- Corporate earnings are the source of returns for any capital market instrument, be it fixed income or equity. The money you invest in the mutual fund schemes (except Gold Schemes) is directly or indirectly made available to various corporate entities, PSU undertakings, State Governments, and the Government of India, depending on the scheme’s investment objective. Any increase or decrease in corporate earnings/growth will affect the capital markets positively or negatively. All Corporations aim for year-on-year growth within a range, and when the growth gets affected negatively, they muster all the resources at their command in such a way to regain the growth.
- This cycle keeps repeating, and hence the returns tend to move towards the long-term mean even as there could be some shifts sometimes. This long-term growth is also reflected in the returns of a mutual fund scheme when the values of underlying securities go up. Due to the cyclical nature of the business or economy, the returns may move away from the mean, but in the long run, they converge to the mean. Any long-term observer of companies and economic cycles will appreciate this fact immediately.??
- The Government and the policymakers also address the structural reasons for a slowdown in the economy so that a Country’s growth objectives are achieved. Because of all the concerted actions by all the stakeholders to achieve the required or stated rate of growth, your optimism is not misplaced. In fact, in the past, we have seen that an even bigger boom follows every bust in a business cycle. India, a country with a very young population, has immense potential to grow, and these short-term slowdowns are an excellent opportunity to invest in assets with high long-term potential. It requires your attention and patience to understand the dynamics, be focused, and hold on to your strategy.?
- ?We are here to help you in all the possible ways to achieve your #financialgoals with the least potential risks and costs.
- ?So, to those who are worried about the lack of performance in the last year or so, our advice is to have patience and stick to your plan.?
- ?The capital market will rebound and eventually provide you with the necessary returns. If fear takes over and you succumb to it, you will buy at highs and sell at lows. Strategic asset allocation will help you to do the reverse – buy at lows and hold on to it till you realize your investment objective. We don’t want you to exit at the wrong time and later rue the opportunity lost. If you are sitting on cash because of fear, think of the opportunities you will be foregoing of buying at the lows.
#Mutualfund #investing #finance
