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Should I exit my investments and sit on cash?

Here is Dhirendra Kumar's advice for those planning to exit the market

Given the current market scenario, would you suggest taking the money out and sitting on cash? I have a horizon of about five years.
- Sharada Murali

No. Just recall the situation of March. Everybody was very scared. And if you had taken out your money at that time, you would have made all the losses permanent and missed the big rally that followed soon.

My advice may hurt you in the short run. But I am confident that over a five-year period, you will not have any regrets. I would like to suggest one thing, if your money is entirely into equity and you have a time frame of just five years, make sure that you are making your investment a little conservative. You may use aggressive hybrid funds to invest your money. By that, a third of your money will be in fixed income. In a market fall, they will not crumble as freely as the market. You will be able to build some shock absorber and this is a good way of having an asset allocation.

The problem of taking all your money out and waiting for that correction is that you just may keep waiting, miss on a big opportunity and then you will regret. It is very difficult to say whether the markets will come down or not, but I am confident that they will do better in a five-year time frame.