1. Even the best of fund managers could not time the market all the time, so it is quite natural that an untrained retail mutual fund investor will not succeed too.
2. However, the reality is that a large number of investors feel that they can time their market entry and exit perfectly and hence try the same after availing the tax advantage, but most often end up with disastrous results.
3. This is because several factors influence stock prices (hence Net Asset Value of funds) and it is not always possible to predict all the factors correctly.
4. A prudent investment practice is to invest systematically and with a long-term approach.
5. Investing in equity-oriented mutual funds works well when done systematically and over the long term.
6. By investing systematically, you average out your acquisition cost, avoid timing the market, and get the advantage of the power of compounding.
7. Likewise, in the long run, the market moves in cycles, which gives you the scope to exit gainfully at different times.
8. Besides, you should invest in equity mutual funds for at least 3-5 years, and review the performance of your funds once a year, as a fund which is good today may not remain so forever.
9. Systematic Withdrawal Plan (SWP), being reverse of Systematic Investment Plan (SIP), is a good retirement plan for withdrawing regular cash requirement from a long-term equity fund for meeting expenses.
10. If you really want to book profits only, you can opt for the Appreciation SWP route where you withdraw only the appreciation on your investments, while your initial capital remains unchanged, over a pre-fixed time interval.
2. However, the reality is that a large number of investors feel that they can time their market entry and exit perfectly and hence try the same after availing the tax advantage, but most often end up with disastrous results.
3. This is because several factors influence stock prices (hence Net Asset Value of funds) and it is not always possible to predict all the factors correctly.
4. A prudent investment practice is to invest systematically and with a long-term approach.
5. Investing in equity-oriented mutual funds works well when done systematically and over the long term.
6. By investing systematically, you average out your acquisition cost, avoid timing the market, and get the advantage of the power of compounding.
7. Likewise, in the long run, the market moves in cycles, which gives you the scope to exit gainfully at different times.
8. Besides, you should invest in equity mutual funds for at least 3-5 years, and review the performance of your funds once a year, as a fund which is good today may not remain so forever.
9. Systematic Withdrawal Plan (SWP), being reverse of Systematic Investment Plan (SIP), is a good retirement plan for withdrawing regular cash requirement from a long-term equity fund for meeting expenses.
10. If you really want to book profits only, you can opt for the Appreciation SWP route where you withdraw only the appreciation on your investments, while your initial capital remains unchanged, over a pre-fixed time interval.