I am a retired senior citizen. In the past 4-5 years, I have invested about Rs 8-9 lakh in mutual funds. I want to know for how long I should continue investing, because the fund NAVs keep going down. So should I continue investing till the equity markets turn around or should I redeem?
-Jayant
If you're dependant on these investments for your income, then equity mutual funds are not the desirable vehicle. The money for your regular consumption should come from a guaranteed-income investment like Post Office MIP or Senior Citizens Savings Scheme. These should be your first savings vehicles.
On the other hand, if you have a regular income stream and you don’t have to depend on your fund investments, then you must continue investing. Equity mutual funds are important because they help you beat inflation, which your fixed income investments don’t achieve. But the possibility of beating inflation comes with anxiety; equities will be turbulent, but on a long-term basis, they will help you beat inflation and protect the worth of your capital.
This article was originally published on May 10, 2012.
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