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RK Kapila asks if he should stay invested in the current unpredictable market or opt for a safe exit

I started investing in mutual funds last year but am quite tense due to the current turmoil in the markets. I do not want to exit in panic but daily downslide is becoming a cause of concern. Is it a temporary phase or will it take a long time to recover? The schemes taken by me were as per your guideline and I have checked the past track record of the last three to five years before investing but am still facing this problem. As is always said, I can wait for the long term but how much is the long term period. Will it be worth to wait or do you recommend a safe exit with loss. Please guide.
-R K Kapila

The stock markets have tumbled and so have the mutual fund NAVs, but one needs to be patient. You should certainly not worry about these market gyrations if you have done good quality fund selection after evaluating the historic performance over time. The main problem we believe if of expectations. Historically, equity diversified funds have generated astounding returns in the range of 50 per cent per annum. Going ahead you should not expect the same. If you have been spreading your investments over time (by opting for SIP) and have not done one time investments, you should be able to generate decent returns in the long run. Equity fund investments should be done with a minimum of five to seven years time frame. As you have invested last year itself, you should perhaps remain invested and be patient. Do not track your mutual funds' performance daily.



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