At the time when people start investing in equity Mutual Funds for their long-term goals, on a prior basis they are advised to put a small part of their fund in debt funds, as because having Debt Funds in mutual funds portfolio, helps its investors, to keep aside the thought of selling their Equity Investments, which ultimately helps their Equity Funds to grow positively for their Long-term Goals.
Selling anything worth crores, for the need of lakhs or thousands, is worse idea ever, then how can it be a good option to sell your Long-term, equity investments, for your short-term in needs. Its also a worse idea to sell your Equity funds, just because market is showing a large scale fluctuation, rather it is always advised to sell or redeem your equity investments, only when you ensure that the reason for which you are taking out the money is that your financial goal, for which you are investing is near.
Let us understand, how you should carry your equity investments, and how your debt funds in your portfolio help your Equity Investments to grow.
Don’t Let Your Emotions Overrule
It is always explained to equity investors before they start investing, “Your Equity investments need time to grow, and to cater to the effects of periodic volatility of the market.” To earn good returns from equity investment, a minimum of 7 years of continued investment must be there, but this is not easy to implement for everyone.
It's difficult to digest the ups and downs of the market, without reacting adversely, especially when your investments are beginning to approach levels, significant for your goal amounts. Currently, the investor gets afraid of losing his hard-earned money just because of the jittery market, thus in order to save his money, he decides to redeem his equity investments, in short-tenure, and ultimately, either receive a low benefit or ends with a loss.
Basically, as an investor, you need to understand the importance of staying invested for the long run, when you invest in Equity Investments and need to understand, how your long investment tenure, average out the fluctuation of the market, during your investment period and gives a cheerful benefit on your investment.
Make Sure You Stay Invested, For the Long-Term
Well, this is the most important thing, you must make sure that you stay invested for a long period in your Equity Mutual fund. This can be done via two ways, first, don’t get refrained when the market fluctuates, and secondly find a way that makes you sure, you don’t need the money you invest in equity, immediately. This can be done, by putting some money in an investment structure, that doesn’t fluctuate or is not exposed to any major losses.
Include Short Term Debt Funds, In Your Portfolio Before Adding Equity to It
For your short-term goals, or immediate requirement of money, you should invest a part of your fund in different types of Debt funds, this helps you in a number of ways:
- It gives good diversification to your portfolio.
- It can work as a valuable tool for protecting your wealth from Equity Investments.
Investing in low volatility fixed income investments such as liquid funds and short duration debt funds will ensure that you never you that you never redeem your equity investments unless you have reached your long-term goal amount. Your Liquid fund investment also works as emergency funds, for your inevitable money requirement.
As of now, you would have understood, how having Debt Funds in your mutual fund portfolio, helps your Equity Investments to grow and protects your wealth creation from Equity Investments. So, if you are planning to invest in long-term Equity Mutual funds, don’t forget to add Debt fund in your portfolio, or if you are already an Equity investor and don’t have a debt fund in your portfolio, then today only, invest in debt fund and protect your wealth creation from Equity Investments.
Most importantly, always consult a financial planner or advisor, before starting your investments. They will help you select the best fund, for your investments as per your requirement.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).