Is the SIP target achieved or is it in the middle? What should investors do when Sensex reaches 80 thousand?

Mutual Funds Strategy :The stock market is at its record high. On July 3, the BSE benchmark Sensex broke the 80 thousand level for the first time. On December 12, 2023, the Sensex reached 70 thousand, that is, in less than 7 months it has shown a rise of 10 thousand points. On the other hand, if we talk about 2 years, then the Sensex has increased from 53 thousand to 27 thousand points to reach the level of 80 thousand. Talking about the time of Coivd, the Sensex was at the level of 26 thousand in March 2020. Since then it has gained 54 thousand points. The question is what should equity mutual fund investors do after such a big rally in equity. Should they redeem the SIP or still continue.

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The market boom is not unrealistic

Kotak Securities Equity Head, Shrikant Chauhan says that if we look back 4 years ago, in March 2020, the Sensex was around 26000 levels, which is now over 80000, up by about 54000 points. It seems unrealistic, but it is also true. It reassures investors that equity markets have performed well in the long run, we need patience and confidence while investing and even after that. Based on the current domestic macros, investors should continue SIPs in equity with a long-term goal. Mutual fund strategies are different from investing directly in the stock market. Long-term investors who have well-diversified portfolios and invest through SIPs should maintain the investment for a long period.

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Buy units when the market is weak

BPN Fincap director AK Nigam says that this is not the first time that the market has rallied. Rally and then consolidation is in the nature of the market. Therefore, even though the market has crossed 80 thousand, it will continue to rise in the future. Therefore, if you are doing SIP, then instead of getting scared of the market’s rise, stay in SIP. Rather, if the market falls, buy more units. That is, increase the investment when the market falls.

if your goals are achieved

Nigam says that if your financial goals are achieved, then you can shift your money from equity to a safer option. You can understand it like this, suppose you started a SIP for your child’s higher education. Your goal was to raise 15 lakhs through this. If the value of your SIP has become 15 lakhs or is very close to it, then you are advised to shift your money to a safer option at this market valuation. This will not cause you a single penny loss till you reach your goal. You can shift your money to FD or debt options.

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For first-time investors

If you are new to the market, then you will have to follow an asset allocation strategy where there is a right ratio of equity, debt and gold. If you want exposure to equity, then large-cap and multi-cap funds are better options in the current times. You can decide the asset allocation based on your age and risk-taking ability.

What is the capacity to take risk

If you are between 21 and 40 years of age and can take risks, you can allocate 80% to equity and 20% to debt. If you are between 40 and 55 years of age, you will fall under the moderate risk category. In such a case, you can decide the ratio of equity and debt to be 60 and 40% or 50 and 50%. If your age is more than 55 years, i.e. you are a conservative investor based on your risk-taking ability, then the exposure to equity and debt should be 40% and 60%.