Suppose you invest in a mutual fund, and the fund starts performing poorly in the next couple of months. In this situation, it is easy to get disheartened. You may even start questioning your investment choices and wonder if you should sell your mutual fund units at a loss.
Now, suppose you do not sell your mutual fund units at this stage, and the market falls. The net asset value (NAV) of your holdings reduces even further. This may lead to dismay, and you may begin worrying about the future of your invested amount!
This fear and anxiety are the result of impatience. All mutual funds need time to perform in the market, but investors often fail to understand this. As a result, they lose patience and make bad investment choices. Therefore, you must keep an optimistic mindset and be patient with mutual funds.
Read this article to understand the importance of investor optimism and patience.
Additional Read – Why to Invest in Mutual Funds?
Have faith in your chosen fund
All investors are careful when choosing where to invest. When you picked your fund, you must have gone through its terms and conditions and checked its performance rating.
When your chosen fund is underperforming, you may be tempted to switch to a better performing fund. But doing this can significantly shrink your investment amount.
By switching your money to a better performing fund, you end up buying high and selling low, which harms your long-term results. In-turn the capital appreciation takes more time if there is a lot of churn in the portfolio.
Focus on your long-term goals
If you start judging the performance of your mutual fund after a few months, it can cause worry and anxiety. Focusing on short-term results can harm your long-term investment objectives. You may rush to abandon a potentially successful investment because of negative emotions.
So, be patient and give it time. Do not let short-term market volatility affect your investment decisions.
Do not project your fear into the future
Distressed and pessimistic investors often project their feelings into the future. They assume what may happen with their investments and experience tremendous fear and trigger impatience.
In the real world, with mutual funds, there is no way of predicting the precise trajectory of your money. So, pessimistic investors may hesitate to invest and lose profitable opportunities.
So, when it comes to the performance in the market, optimism goes a long way. Understand that while not all your investments may match your expectations, not all will fail. Do not think of it as an all-or-nothing battle.
Additional Read – What is the Best Time to Invest in Mutual Funds?
And finally, make the right choices
We at Tata Capital understand that all investors have different mindsets, risk profiles, and financial goals. And this is why with Tata Capital’s Moneyfy app, you get mutual fund recommendations according to your preferences.
Once registered on the app, you can use our questionnaire to assess your risk profile and set a financial goal. Then, sit back and relax, and let us fetch the mutual fund schemes for you!
Download the app today, and complete the online KYC process, and you will be investment-ready in a few days.