Stock market, on the whole, has fared quite well in the past one year. Investors’ reaction, nevertheless, has been mixed. Some continue to invest into equities, while others are still waiting on the sidelines. This trend sums up the investors’ general lack of interest in this asset class (equity), which if invested into carefully, can reap excellent returns over the long term.
People generally don’t trust the sustainability of equity returns. Market volatility and bad experiences also keep them away. Thus, they lose out on the opportunity to enter during early phases of the market rallies.
If looked at carefully, equity investments yield best results if they’re indulged into in a systematic manner and with a long-term perspective. While the long-term approach negates the effects of medium and short term market volatility, systematic investment strategy prevents one from committing more than what is advisable at particular market levels.
You must also pay heed to the medium chosen for equity investments, to fetch optimum returns. Hence, a good number of investors choose to invest into equities via mutual funds, taking the SIP(Systematic Investment Plan) route.
If you’ve avoided equity funds so far for any particular reason, it’s time you take the plunge into equity fund SIPs. However, don’t do it because market is yet to manifest its peak levels. Rather, do it because investing into equity funds using a disciplined and long-term approach, you can accomplish your long-term life stage goals like children’s education/marriage, retirement planning etc. By investing over a time horizon of 10 to 15 years, you won’t have to worry about the fluctuating market levels.
On the other hand, you shouldn’t take SIP returns for granted. Following are some important factors you must carefully consider to ensure that you receive healthy and timely returns to meet your different life stage goals:
