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I'm not able to pocket any returns on my investments. What should I do?

Follow an asset allocation and rebalance it periodically to book profits in a methodical way, says Dhirendra Kumar

I have been investing continuously in mutual funds through SIPs for five years. But as I can see, returns are zero right now. I have also analysed my previous investments and realised that the market goes down in every four-five years and my returns become zero. So, how would I pocket gains from mutual funds? Or should I invest directly in stocks?
- Rajesh

It is a different question whether you should invest in the stock market directly or through mutual funds. It depends on whether you have the required temperament, skills and time and also, whether you are able to identify good companies to buy stocks and maintain a quality diversified portfolio on your own. If you are able to do that, you will save on the expense ratio that you pay in mutual funds. Your returns will automatically increase by 1-2 per cent, depending on whether you were investing in regular plans or direct plans. But here you won't have the convenience of investing small amounts every month as you have in an SIP. So, first, you have to see whether you can do it on your own or not.

Coming to your question on pocketing gains, there is a simple way for it. Follow an asset allocation of 60:40-40 per cent in fixed-income and 60 per cent in equity. Review it regularly and rebalance, at least once every year. Say if your equity becomes 66 per cent, withdraw 6 per cent and invest it in fixed income. This is a very methodical and automatic way of buying low and selling high. It will help you book profits systematically.