Many factors are involved when it comes to opting for the financial instrument, which one must want to invest its hard-earned money in, be it a crisis or not. The first thing to think about is why are you investing and for how long? Next, you decide the asset class in which you want to invest based on the time frame and investment option most suitable for you.   

Equities have proven track record to not only beat all asset classes for 40 years in the Indian stock market and US market for over 100 years, but it also has a history of beating inflation over a 7 year or greater period. 

Other asset classes have also beaten inflation but have never been consistent in their performance. To attain long term objective, or for growing your savings, and at the same time beat inflation, equity has always been the winner in between all asset classes. 

What choice an investor should make?

Mutual funds in India have been around for decades, but India saw more retail investment through direct purchase of shares. The only reason is that the awareness regarding the mutual fund was less till 2010. 

Investing in stocks is volatile, as it is market-based and is traded every day. Several factors, from the company’s balance sheet to global trends the number of factors affecting the price is mind-numbing. 

For the investor of stocks, stock selection has become more difficult through the information related to investment is available in a thousand folds around the internet. And all providing the information legally. But investors like you and I don’t have the time to do the survey and then invest rather say we are not qualified enough to make an analytic decision to make a wise investment. 

So, is it enough to have all the information and then invest, I don’t think, the recent pandemic has made it almost impossible to predict the market. Traders, thinking of timing the market, are getting surprised by the sharp falls and reversals, as was seen on the 19th of March.

Stock for long term investment 

Investing in equity is for long term wealth creation, a process that unfolds over decades. Our current annual growth rate is approximately 12%. Some even have got returns of approximately 14%-16% in the past. Depending solely on the growth of your company your stock portfolio will show the growth. 

Here the thing to know is being invested in the company that represents the best of the economy is tough, because once the company that has ruled the market once became bankrupt later. The recent Yes bank crisis shows how much the fortunes of a company can change. That story unfolded while the Yes Bank stock was still part of the Nifty50!

How mutual fund provides an edge to investment?

Here mutual fund comes at the rescue to beat the uncertainty of the stock market, the mutual fund will provide you with options to invest in stocks who have been consistent with its performance and it is way less risky than the stock market. 

In such uncertain environments of COVID 19 where the world market is facing the crashes and the lockdown are hard to ascertain the full impact of the whole crisis. Selecting stocks is nothing short of challenging. Mutual funds are much more likely to make better decisions about what to do because they have been monitoring these events for a while and have experience of dealing with market crashes.

Don’t forget this crisis will have its own set of winners and losers at the end of it. Those who want to invest in equity as an asset class are better off trusting good funds to do what is smart at this stage rather than trying to bet which stocks. The crisis of 2007-08 hit the banking sector hard but the best banks went on to become perhaps the most valuable part of the indices today. Mutual funds manage your portfolio in such a way that your returns remain consistent in crisis and there is much chance of getting good returns when the crisis ends. 

Choose wisely!

Happy Investing

A mutual fund is subject to market risk, please read offer related document carefully before investing.