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Is it a good time to invest in equity 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|
Updated: Aug 09, 2019, 10.53 AM IST
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I am a 42-year old IT professional. I would like to invest in equity with a long term goal. Is it the right time to invest in equity mutual funds? I want to keep around 10 per cent of my portfolio in equity. I already have investments in liquid funds for some safe guaranteed returns. Markets are falling these days; So, is it a good time to invest in equity?
-Hari Krishna


You should not place your investment decisions based on the prevailing market conditions. Equity mutual fund investments are recommended to investors to achieve their long—term financial goals like children’s education, retirement, and so on. When you are investing for a very long period, short-term volatility and trends really do not matter.

One of the main reasons why equity is considered ideal to achieve long goals is that it can offer superior returns than other asset classes over a long period. Producing inflation-beating better after-tax returns is extremely crucial to build a large corpus to take care of your future financial goals.

You should consult a mutual fund advisor or a financial planner to get more clarity on investments. It is not a great idea to limit your equity investments to just 10 per cent. Unless you have a lot money, that is. If you invest most of your corpus in safer avenues, you would earn modest returns that will not even beat inflation over a long period. This will result in a small corpus that won’t be able to take care of your future financial needs.
(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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