3 Things All Mutual Fund SIP Investors Should Do Right Now

It’s been a frustrating couple of years for Mutual Fund SIP investors. Buoyed by the impactful “Mutual Funds Sahi Hai Campaign”, hordes of first timers rushed into Mutual Fund SIP’s in 2016 and 2017, only to be sitting on flat returns even after two years. If you are one of them, what should you be doing? Read on.

Understand How Market Cycles Work

It’s an unfortunate truth that most SIP investors (especially those who invested into Direct Plans without the support of a Financial Advisor) do not even understand the dynamics of SIP’s in the first place! They started their SIP’s expecting linear returns such as the ones generated by fixed deposits. Therefore, the first step would be to self-educate oneself on how market cycles work. It’s critical to understand that Mutual Fund SIP’s may even deliver negative returns for a couple of years, only to follow it up with outstanding growth over the next couple of years. The danger lies in attempting to time the market, which is an impossible feat that will, in the long run, lead to poor returns from equity-oriented investments.

Stay Committed To Your Goals

If you’ve started a SIP without a long-term objective in mind, your chances of success are quite slim to begin with. You’ll be easily swayed by low return phases, and be prone to withdrawing your funds whenever the need for liquidity arises. It is vital to work with a Financial Advisor to link your Mutual Fund SIP’s to your life goals and milestones: such as your children’s education, a home purchase, your retirement and the likes. Doing this will ensure you keep your eyes on the picture and invest wisely, without succumbing to your emotions.

Cultivate Dispassion… Inaction Is The Key To Success!

The best thing you can do with your SIP’s is to do nothing at all! Truly, it is the ups and downs of the markets that drive long term returns from them. The moment you throw your own activity into the mix (such as stopping and starting, timing the market etc), you end up nullifying your chances of success. It may be easier said that done, especially when markets are south bound, but the only real way you can succeed in earning great long term returns from your Mutual Fund SIP’s, would be to continue allowing them to hit your account like clockwork, without paying too much attention to short- or medium-term returns. Don’t worry, your patience is bound to pay off in the long run!