Markets are high and many are saying there is a major correction going to happen. Is it safe to invest in mutual funds in this stage or should i wait till the markets fall and the NAV of mutual funds are lower than today?Asked
The stock market is very cyclical and it will keep having lows and highs. The returns, however, have been on similar lines irrespective of the market condition at the time of making the decision to invest.
Mutual funds are the best investment tools for investors who are risk averse as well as for those who seek risk, for those who want to invest money to fund their long term goal, as well as for those who want regular returns, for those who are new to the world of investing as well as for those who are not. Similarly, investment in mutual funds is independent of the market tide. Whether the markets are high or low, mutual funds offer various instruments that enable smart investment. The important thing is to determine what your goals for investing are and in what time frame do you wish to achieve them.
If you are still anxious of rising markets, then one option is to invest in a Systematic Investment Plan (SIP). Investing through SIP takes care of the volatility of the market as the purchase cost gets averaged out thereby reducing risk and providing decent returns. You can read more about the benefits of SIP here.
Also, if you have a lump sum amount and want to avoid short term market risk then you can invest through the Systematic Transfer Plan (STP) route. In STP you can invest the sum in a debt fund and then gradually transfer the amount to an equity fund in a periodic manner where the period could be quarterly or monthly as decided by you. The investment can also be transferred from equity to debt if the markets are performing poorly. This allows the investor to hedge the market risk to some extent and maximize returns. You can read more about STP here.
You can contact Groww if you need further help in investing money in a responsible and smart manner. Hope this answers your question!
Again, as with any investment, you must ascertain the duration of investing. Based on how long you plan to invest for, you must make a decision. But even if the markets are high, there is a way out.