Amid crash, focus on long-term financial goals, suggest analysts

In the aftermath of a market correction, mutual fund investors often face a critical decision — to stop their Systematic Investment Plans (SIPs) or to view the downturn as a valuable opportunity.

Historically, market correction tends to be short-lived, frequently providing a chance to buy mutual fund units at lower prices. According to VSRK Capital director Swapnil Aggarwal, by continuing SIPs during such downturns, investors can take advantage of ‘rupee-cost averaging,’ accumulating more units when prices are reduced. This approach not only lowers the average cost per unit but also positions the portfolio for greater returns when the market eventually recovers, softening the impact of short-term volatility.

According to experts, alongside maintaining regular investments, revisiting asset allocation becomes essential in turbulent times. A well-diversified portfolio that balances equities with safer assets such as bonds can withstand market fluctuations more effectively. This may involve shifting some investments into bond funds or other stable instruments, which can provide a cushion against further declines.

While the immediate impact of a market correction may lead to declines in the NAV (Net Asset Value) of mutual funds, disciplined investors can view this as a moment to reassess their strategies. Focusing on long-term financial goals while adopting a proactive approach allows investors to turn market volatility into opportunity, say analysts.