The market is hot, but should you sell your mutual funds or retain them?

The Sensex has surpassed the 65,000 mark. Should the new, higher number effect your market investment (through mutual funds)?

by Akash Jha July 6, 2023, 12:58 AM 31 Views

Mutual fund investors, unlike active investors or traders, rely on the experience and convenience of mutual fund advisors to manage the market. However, as the Sensex achieves new highs, mutual fund investors are considering modifications to their investments. With the Sensex topping 65,000 today, mutual fund investors are experiencing a mix of exhilaration and contemplation.

THE SENSEX: JUST NUMBERS, NOT A DESTINATION

It is critical to understand that market highs are just numbers, not destinations. The Sensex has demonstrated its toughness in the face of wars, recessions, and industry upheavals, always emerging stronger. From 148 points in 1980 to current highs of 65,000, the index’s development has been tremendous. With a compounding return of 12-15 percent, earning Rs1 lakh in the next 3-4 years and Rs5 lakh in the long term is within reach by utilizing the power of compounding. As a result, it is prudent to maintain mutual fund SIPs, hold shares, and expand investments since “mutual funds sahi hai.”

WHAT ARE SOME MUTUAL FUND INVESTORS CONSIDERING?

Concerns about the El Nio danger to the monsoon, inflation and recession worries, global economic conditions, and other factors have generated suggestions of selling and re-entering the market when a correction happens.

THE PITFALLS OF TIMING THE MARKET

Market timing is impossible, as Buffett himself admits: “Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” No human being can reliably foresee future market behavior. To strive to outsmart the market is to aspire to what only God can give you: divine powers. Therefore, it is crucial to pause and think things through before making decisions based on temporary market shifts.

ASK THE RIGHT QUESTIONS

Before selling and booking profits, consider the following questions:

1) Why did you invest in the first place?

2) Are you a speculator or a long-term wealth creator?

3) What will you do with the proceeds from selling your mutual funds?

If you are able to reach your objective ahead of schedule due to the rise of the Sensex, such as if you had intended to save Rs1 crore for your children’s education by 2024 but have already done so, you should take profits as you reach your target. If retirement and college for one’s children are still 5-10-15 years away, then why should an individual be concerned about seeing all-time highs and struggling to sell their investments?

EMBRACE THE BULL AND UNLEASH THE POTENTIAL OF COMPOUNDING

When the market reaches new heights, you shouldn’t let fear control your actions. Recognize our country’s huge potential if you, like me, believe in its incredible growth and potential. Instead of giving in to short-term thinking, keep investing until you have achieved your long-term goals or have a pressing financial need. Focus on your profession or your business and let the miracle of compounding work in the market while you reap the benefits. Keep in mind that the greatest rewards in investing and in life generally go to those who patiently wait for the dramatic story to play out.