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Wednesday 19 March 2014

Don’t Panic When Your Mutual Funds’ NAVs Are Low


To harness the untameable power of stock markets, you need expert knowledge, shrewdness and an alert-eye to spot opportunities out of the blues. Finding opportunities in equity trades is like hunting for a prey in dark. While hunting, you are aware about all the conditions favorable to catch the prey. The only thing you are doing is waiting for the target to pop out. Once the target pops out of its hiding, you pounce on it and feast over it.

Similarly, stock market players are called as hunters. They can go for days on empty stomach and wait for the opportunity to surface out in the air. Once the opportunity is spotted, they will exploit it to gain significant capital returns. Mutual fund companies or AMCs are comprised of such hunters, who eagerly wait for favorable market conditions and tap the monetization opportunities. At any point of time, mutual fund NAV describes the health of the particular scheme.

NAV is one of the factors, which compel investors to buy or sell the MF units. During troubled times, its value drops, and you may find the mutual fund performance poor. However, troubled financial times do speak out loudly for the lean periods where a hunter spend lean days waiting for his target to surface up. So, whenever the NAVs of your mutual fund investments drop down; do not panic. Instead, hold onto the funds or buy new ones. There is a high probability that you will end up in profit when things become bright and stable.

Besides, MF schemes are not made to harness capital gains in short terms. They are classified as long term investments, which offer almost 20% returns at the time of exit. So, why turn finicky and panic during troubled times when a little patience and perseverance can guarantee positive results in future?


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