HERE'S WHAT EQUITY MUTUAL FUND INVESTORS MAY DO WHEN STOCK MARKET SENSES CORRECTION

2022 began with a lot of hope as far as the equity market is concerned. On the back of spectacular returns since the second half of 2020 and later in 2021, the expectations were high for the stock market to continue its run. However, the stock market is not a one-way street and prices go up and down. The good news is that any dips and corrections in the market are used by smart investors as an opportunity to buy more. Afterall, buying low-selling high remains the best move forward in the equity market.

- Sanjeev Puri

The US Fed is all-set to stop infusing liquidity in the market through its Quantitative Tightening measures as well as start hiking interest rates to tame the rising inflation in the US. Besides that the loggerhead between Russian-UkraineNATO is going to take its toll unless the air is clear and resolutions are reached.

But, amidst all these geopolitical situations, your investing can’t wait. Your long term goals need to be funded on a regular basis and trying to time the market may prove futile in the long term. For long investors, such events in the market are not that important and rather its time to make use of the volatility in the market.

For a long term investor, who is saving in equity mutual funds for meeting the long term goals, these events pose no danger. Over the long term, equities have shown the tendency to drift with an upward momentum. All those investors who did not exit but continued with their investments after the market crashed in March 2020 stand to benefit from the spectacular rebound the markets saw. An investor having seen the ups and down of such a market remains poised for the long haul and is largely undisturbed with such frequent fluctuations.

Investors especially the youngsters should not be too wary about the current market situation. When you are starting out, it’s easier to commit money for long periods, as you have few financial responsibilities and are in a position to take risks with your investments. The other advantage of starting young is that mid-course corrections are possible without any major impact on your portfolio.