Covid 2nd wave: Should mutual fund investors book their recent profits?

Many mutual fund investors are extremely nervous about the markets. Their major concern is about preserving the profits they have made in the recent past. “Everyone wants to book profits, but at the same time nobody wants to miss a likely rally,” says a financial planner. He says he got so many queries in the last two weeks about safeguarding the profits.According to mutual fund advisors, investors are clearly nervous about the high infections and deaths due to the second wave of Covid-19 in India. They are concerned about preserving the capital and recent profits but they are also equally worried about missing out an opportunity to make money. Hence a lot of queries and strategies doing the rounds, they say.Advisors and planners say investors should not look for miracles and make a well thought out plan. They say investors should understand that there is no way they can take money out of the market and still participate in the likely upside in the market.“You should remember that there is no way of having the cake and eating it too. If anyone is saying otherwise, they are trying to fool you,” says the planner. He says he keeps hearing various plans devised by enterprising investors and advisors. Most of these strategies involve booking profits and sitting on cash or parking the money elsewhere. As you can see, it involves timing the market. If you can pull it off, you can go ahead. Remember the investors who were sitting on sidelines for clear clues last year."Advisors say investors should remember their choices and act accordingly. A regular investor can book part of their profits or full profits. This sure helps you to protect your profits but you should really have a plan about what to do with the money. You want to park it in a safe place like debt funds to safeguard the money. Then what?You want to get back to the market? When? You should have a level or valuation parameters that will guide you. This strategy is not foolproof. As you know investors who got out of the market after last year’s crash never got a chance to get back. The firm cues they were looking for keep evading them.

from Economic Times https://ift.tt/3nHf4TO