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Is it the right time to sell mutual funds?

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

ET Online|
Sep 09, 2019, 11.54 AM IST
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investing in MF
Is economic slowdown a proper time to withdraw from mutual funds?
-Om Prakash mostly get questions asking whether it is the right time to invest in mutual funds. We get numerous such queries during a market downturn. You are the first person to ask whether it is the right to sell.

You are right that there is an economic slowdown. However, should you sell your equity investments now? You can take the scenario a bit forward and answer it yourself. Okay, you sell your equity mutual fund investments now and park the proceeds in a bank deposit or debt mutual fund. When there is a revival in the economy and improvement in market sentiment, you want to get back to the market. Guess what? The market might have already gone up too far. This is because the market does not go up on the news, but in anticipation of it. It simply means you miss an opportunity to make money from the stock market.

This is the main reason why mutual fund managers and advisors ask investors to invest via SIPs through ups and downs in the market. Since we cannot predict the market and want to earn over inflation to create wealth over a long period to achieve our long-term financial goals, we do not have an option other than to continue to invest. One advantage of investing when the market is down is that you can buy more units and average your purchase cost. It helps you to maximise wealth.

Of course, the other way is to get in and out of the market at the right time. It is called the timing of the market and countless studies prove that you can’t do that successfully for a very long period.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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