Skip to main content

What to do when your investments do not work out as expected

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 



It's not easy being a long- term investor. For long periods, things may not be in your favour. For instance, in the past five years, the Bombay Stock Exchange Sensitive Index, or S& P Sensex, has returned barely five per cent annually. Obviously, there will be a lot of anguish.

While analysts or investment advisors give ample advice on where to invest, but there is limited advice on what to do when your investment does not perform up to mark. The best advice that is given is -- hold on. But as an investor, if your investment is not performing too well, there are two things you need to do. One, analyse why is it so? Then, take remedial measures, if required.

Failure of instruments to give adequate returns is a common phenomenon these days. This may happen mainly in stock market- linked products like equity and mutual funds. But it can also happen in case of some traditional fixed income instruments such as company fixed deposits or gold. It is important for investors to note that they cannot win always. Secondly, there are many who can outsmart you in the market. Also markets are not perfect and are not always Non- performance may be for the following reasons:

Selection of wrong investment product:

This can result into poor performance of the investment. For instance, insurance products generally provide very nominal return which cannot even beat inflation so it can result in destruction of wealth. Similarly putting money in a fixed deposit with say 8 or 8.50 per cent annual return may not yield any value for money due to the inflation of more than 9 per cent.

Market conditions:

The investment avenue selected may have had a high- return potential but failed to perform.

For example, you may invest in equity or equity- oriented mutual fund scheme but due to adverse market conditions, they failed to generate desired return.

If an investor comes to realise that his investment has failed to produce desired result, he should take corrective action. There are some points which an investor may keep in mind while tackling such investments:

Avoid averaging of cost:

Averaging cost is the most popular method. The belief is that averaging reduces the cost of purchase and helps in generating wealth in the long term. This may work, if the investment product selected has failed to perform for some temporary reason. However, in case the fortune of that industry has changed permanently or structurally, averaging may result in more losses. However, investors can look at going for a systematic investment plan, in some cases to avoid timing issue of investing.

Hold or sell decision:

If an investment fails to perform in the short term, investors believe that in the long run it will definitely perform and hence, continue to remain invested. It is important to note that long- term investing is not remedy for all investment errors. It is important to analyse whether to hold for or should you come out of some of the incorrect investment decision is very much important.

Booking a loss may be less costly than carrying a loss: It is important to have a stop loss strategy. One should have the heart to book losses. Don't be disillusioned by the fact that your investment choice will always work and hence, you must stay invested.

Please remember carrying a loss will eat away your investments badly in the long run, hence it may be important to have a stop loss strategy.

Retaining failed investment can lead to deterioration of financial wealth.

Constant review:

Investor must know that monitoring the performance of investment on an on- going basis is a key ingredient to ensure success.

You must take the responsibility of tracking the performance of your portfolio at periodic intervals.

Avoid too much churning of portfolio:

Investors who invest without a well- defined time horizon get tempted to make abrupt changes in their portfolio. Lack of clarity in the expectations force them to take impulsive decisions and can lead to further losses. It is important for investors to understand that poor or negative returns could just be a result of the way the market behaves during certain time periods and may not require any action on their part.

The common grouse of equity investors has been their portfolio has not performed up to the mark. In the analysis below, an attempt is made to find out the performance in case a person had invested at various time intervals in say equity index Nifty.

For the benefit of investors we have tracked the performance on a relative basis for various time periods. As can be seen from the above table, if you had invested in the index five years back, your simple annual return would have been just 6.02 per cent for the five year period. In case you had invested three years back i. e. on 20th June 2010, your simple return would have been only 1.88 per cent. However if you had invested last year, the return would have been 10.45 per cent for one year.

Most of the equity investors can take solace from the above table that the stock market has not performed as per expectation. So in case you have seen your portfolio is not performing or is in negative, there should not be much cause for worry.

The process of measuring the performance and monitoring the progress of the portfolio as well as the subsequent actions to fine tune the portfolio if needed requires an investor to follow a well thought out strategy. There is no ready to use solution to remedy any non- performance of investments. However it is important to always have an alternate plan in case your original investment does not provide desired results.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now