Want to invest? Don't wait for market correction!

The stock market continues to rise towards new record highs. The BSE Sensex has crossed 80,000 points, marking a gain of 10,000 points in just one month.

On the day of Lok Sabha election results, June 4, the Sensex was around 70,000 levels. By July 4, it closed above 80,000 points. The Sensex has delivered a return of 14.4% in just one month. It has provided returns of more than 22% in the past year and over 102% in the last 5 years. Brokers estimate that the bullish trend in the market will continue.

Now the question is how can those who are afraid to invest directly in stocks, benefit from the market’s rise? For those who want to benefit from the stock market’s growth with lower risk, Systematic Investment Plans (SIPs) in equity mutual funds are an excellent option.

Should you wait for market correction?

But some people wait for a correction in the market before investing. So should one wait for a downturn in equity mutual funds for investment? Well, it’s difficult to predict when the market will rise or fall.

If you are investing through SIPs in mutual funds with a long-term perspective, no time is bad.

Statistics show that those who invested in equity funds at levels of 50,000, 70,000, and 75,000 have also received double-digit returns. In the last eight years, the market has made a new all-time high every calendar year. In 2024, the Sensex closed at a new record high 25 times.

Those who invested via SIPs of Rs. 10,000 per month in equity five years ago, many schemes have grown their investors’ corpus to over Rs. 10 lakhs.

For example, if you invested in Nippon Small Cap Fund through SIP, you invested Rs. 6 lakhs in five years. Now this account has added Rs. 15.8 lakhs, i.e., an annual return of 35%. If this investment was made in HDFC Flexi Cap Fund, it yielded an annual return of 22%. In this way, a fund of Rs. 12.1 lakhs was added in five years. SIP of Rs. 10,000 in ICICI Pru Bluechip Fund made a corpus of Rs. 10.7 lakhs in five years. An annual return of 20% was made during this period. While Sensex’s CAGR, i.e., annual return remained at 14.87%.

Diversified portfolio works wonders!

Now the question is whether to invest in large-cap equity funds or small-cap funds and what is the right time to invest? SEBI registered investment advisor Jitendra Solanki says that “a diversified portfolio always performs well in investments. One should never invest all their capital in a single category. For this, large-cap and flexi funds are good options. If the investment perspective is more than 5 years, some portion can be invested in mid and small-cap funds.”

Solanki says, “there is no wisdom in waiting for a market correction to take place inorder to invest. If your investment horizon is at least 5 years, you can invest anytime.”

If you are investing through SIPs in mutual funds, you will get fewer units during market growth and more during downturns. This will average out your investment, benefiting you in the long run.

If you are planning to invest in equity mutual funds, don’t wait for a market correction. Investing through SIPs for the long term will always be beneficial.