Sunday, April 26, 2009

I want to Redeem Everything.....

Loss in sip

One Reader wrote :

Hello Experts

I have a question, a very important one.
I have been investing in MF via SIP from last 3 years and as of day, my investment of 6 lacs have come down to 3.8 lacs which shows loss of 2.2 lacs as of date. However I had a long term view but with current meltdown, I am worried as others are.
With US market hitting 12 year low and other asian markets hitting 5 year low and our market have not tested the 1 Year low, chances of testing 2200 on nifty looks pretty high.

I am planning to take out the money, complete 3.8 to save further downside and let new sip getting invested as it is and invest this exited 3.8 lacs once nifty comes around 2200...What is the suggestion of experts on this.

Am very very confused. Request you to show me correct path.

Thanks a lot for your time

db





SRIKANTH SHANKAR MATRUBAI replied :
Dear db,

Your worry is natural. However Redeeming All Funds will be a Great Mistake. You should Review the Performance of each & Every Fund & Switch the Poor Performing Funds to Beter Performing Funds one by one. You should even Continue SIP in Better Performing Funds.

My simple advise is to first look deep in ur portfolio, check the performance of ur funds against its benchmark & after that weed out only non performers or duds from ur folio. Invest the redeemed amount into ur better funds.

I believe that equity as an asset class is suited only to accumulate wealth over the long-term. It is not meant for generating regular income. If deriving periodic income from investment is your objective then equity may not be a suitable vehicle. You had a long term view when you started your investments. That long term view I suppose has not changed. Then why withdraw now and wait for the market to stabilise? Not many has succeded in timing the market and you might be in a situation where the gate was closed after the horse had bolted.
Like I have said earlier, check the performance of your funds against benchmark as well as similar other funds. You might be surprised that your funds might have done better than others and if not, then and then only you should think of going for better ones.
Best of luck,
Srikanth Shankar Matrubai

Also visit http://equityadvise.blogspot.com for an indepth Equity Analysis

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