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

SBI Magnum Tax Gain Scheme 1993 Applcation Form

    https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss     Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.
Read more

Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online   An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.   After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund's rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large outperformance over its benchmark and peers in the last couple of years. The fund's investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfoli
Read more

Should you Roll Over 1 year Fixed Maturity Plans?

The period between January and March typically sees an uptick in the launch of fixed maturity plans, or FMPs. Not this year. Instead, fund houses are busy rolling over or extending the tenure of their one- year FMPs launched last year to three years. Investors in one- year FMPs have a choice. Either redeem units or roll over to three years. If you exit now, your gains will be added to your income and taxed in line with your individual slab rate of 10, 20 or 30 per cent. If you stay invested for two more years, you pay 20 per cent tax with indexation benefit. Yields have softened in the past few months on expectations of a rate cut. If the central bank continues its soft monetary stance, yields are likely to fall further. In such a scenario, it makes sense for investors, particularly those in the 30 per cent tax bracket, to roll over their investments and lock in at a higher yield now. In a surprise move, the Reserve Bank of India cut repo rate by 25 basis
Read more

Mutual Fund Review: IDFC Premier Equity Fund

  IDFC Premier Equity Fund, which falls under the presumed high risk group of mid- and small-cap schemes, can rely on astute and timely equity picks. These make it less vulnerable to fluctuations compared with others in the category   IDFC Premier Equity Fund is designed to invest in upcoming, but promising businesses available at cheap valuations, and hold on to these businesses until they reap desired returns. The experiment has been successful so far, and IDFC Premier Equity has emerged as one of the top performing mutual fund schemes in the mid- and smallcap category of equity schemes.    While the scheme is an open-ended equity fund, i.e. open for subscriptions throughout the year, it has a unique philosophy to limit fresh inflows. Thus, while an investor can always take the systematic investment plan ( SIP ) route to invest in the scheme throughout the year, inflows through a lumpsum investment have been restricted. Since inception, IDFC Premier Equity has been opened for l
Read more

IDFC Premier Equity Fund dividend

  IDFC Mutual Fund   has announced dividend under the dividend option of   IDFC Premier Equity Fund Direct-D . The quantum of dividend shall be   R 4.3464 per unit.   The record date has been fixed as May 06, 2015. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot]
Read more
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