7 MISTAKES NOT TO MAKE IN VOLATILE MARKETS

  1. Don’t check the value of your long-term investments on a daily basis.
    Long-term means “long-term(10, 20, 30 or even 50 years) not “daily”
  2. Don’t stop your SIPs in equity stocks or funds
    Stopping SIPs when markets are going down would be the most foolish thing to do. In falling markets, that you will get better value as the NAV will fall and your average cost price will come down, if you continue SIP in falling markets. Falling markets are the best opportunity for the long-term investor (read: long-term means 10 years to 50 years) (ask some one who invested during the market crash in 2008, he /she would be laughing all the way to the bank)
  3. Don’t try to wait for a market correction to begin investing
    No one, however smart or educated he or she looks or talks or dresses, can ever predict the markets. All people who speak on TV channels and in newspaper interviews have no clue how will the markets be tomorrow morning.
    It is important to spend “time in” the markets rather than “timing” the markets. All studies show that over 10 years plus period, chances of losing money in equities are zero. Also data shows that all SIPs, which are running for more than last 15 years, have given returns in the range of 12% p.a. to 17% p.a. This is more than enough proof that SIPs will work in the long-term.
  4. Don’t ignore fixed income/ debt mutual funds / fixed deposits, just because you think there’s opportunity in equities, every asset class has its own value.
    Always remember: A complete portfolio has to have a balance between equity and debt.Going to any extreme (i.e.: either 100% equity or 100% debt is a big risk)
  5. Don’t begin putting money in equities till you have adequate life and medical insurance and reasonable emergency funds
    First buy a mediclaim policy, then a personal accident policy, then a pure term life insurance policy, then keep 6 months household expenses in liquid fund/bank FD and only then start investing money in equities using the SIP approach
  6. Don’t ignore tax-saving investments, money saved is money earned
    Most tax saving options (equities, PPF, bank fixed deposits, insurance etc) comes with a lock-in period. That is very beneficial, as you will not be tempted to touch those investments and they will grow in the long-term and give you tax benefits too. Double benefit!!
  7. Don’t put your money in unit linked insurance plans, gold and sectoral and thematic funds
    Unit linked insurance plans have 
    high charges, high premiums and combine insurance and investment (which is completely avoidable, instead buy a pure and cheap term life insurance policy, the money you will save can be invested in good quality equity stocks or equity funds)Buy gold only for your family’s future needs and not as an investment as in the long-term (read: long-term as 10 years to 50 years), Gold can only give returns around the inflation and much lower than equity. Sectoral and thematic funds are very risky since they invest only in a few sectors or themes. Diversified funds are always better to invest in.

We at www.investmentz.com provide financial planning services to our customers. Please call us right NOW to make your financial plan

All the best for achieving goals!

Prashant M.Mehta

prashant.mehta@acm.co.in

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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