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Give Funds Time

One year is too short a time frame to consider as an assessment of an equity mutual fund’s performance…

Most of the equity funds are giving single digit returns in the past one year. Is it worthwhile to invest in mutual funds or continue SIP in the hope of miracle?- R S Mani

One year is not the time frame that one should consider when investing in diversified equity funds. The least time that one should look at when investing in these funds is three years and more. The virtues of systematic and regular long-term investing is well documented and there for one to see. When one invests through SIPs one averages the investment over time without waiting for the best opportunity to invest, moreover, the investment can benefit from the power of compounding over the long-term which is offered by investing in equity diversified funds.

This article was originally published on August 19, 2011.

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