Many mutual fund investors are falling for bad advice these days, say mutual fund advisors. According to them, some investors have been waiting for a correction for almost six months, while some other are busy pulling money out of their schemes. Another group is scurrying to sell their investments and investing again in a staggered manner… In short, mutual fund advisors are facing tough time convincing their clients to discard wrong advice.
Deepali Sen, Founder, Srujan Financial Advisers, says some investors are falling for silly theories that floats in the market regularly and they are committing big mistakes. She believes that the main reason behind this is the absence of goals that are linked to investments. “Most investors do not have their schemes linked to goals. This is why they are constantly chasing returns and living in fear,” she says.
Mutual fund investors need not worry about the market levels and pull out the money from the scheme until it is underperforming, say advisors. Investments in equity mutual funds are usually for the long term and investors need not get spooked by periodic volatility.
“A lot has been written and said by many advisors about withdrawing money from mutual fund schemes as they expect a correction. This strategy is for those who have their goals around the corner, not for everyone. Investors who have just started investing are also following this advice,” says Neeraj Chauhan, CEO, The Financial Mall.
Chauhan believes that when you have a long-term goal, current market levels shouldn’t bother you. “When an investor doesn’t know what he is investing for, the investments lack discipline. If you know you are investing for your retirement which is 10 years away, you will not juggle with the money to earn a little extra,” says Neeraj Chauhan.
Mutual fund advisors are asking their clients to quit obsessing about the market and focus on their goals to have a good financial life. “Every free-tip available in the market is not meant for you, investors should understand this. If one investor needs to cut down on equity exposure because he is nearing his goals or he has a lower risk appetite, it doesn’t necessarily be a great advice for an aggressive investor,” says Deeplai Sen.
Neeraj Chauhan says that disciplined investing for a long time and ignoring the noise is the key to success. “Plan your goals, start investing for them and leave it. If you want to earn great returns and play with your money, go for stock market trading. Mutual funds aren’t the suitable vehicle for that,” says Chauhan.