InvestorQ : Should I stop investing in Mutual Funds? As the market down.
made post

Should I stop investing in Mutual Funds? As the market down.

Shreya Karn answered.
3 years ago
Mutual funds are funds that are pooled from different investor and invested in more than one security. Also, Mutual funds are known for its diversification, which means that money is invested in different securities, thus making Mutual fund a less risky option. Coming back to the question, when the market is at low one can buy the same securities at less prices. For example, at times of e-commerce festive sales like Amazon and Flipkart, would you buy the product with a heavy discount? Yes, and so buying Mutual funds when the market is low does make sense. However, one has to understand the reason of the prices going low for the specific sectors. Considering the similar examples of e-commerce festive sales, you would only buy product that you find important and valuable and not those which are perishable as perishable product might have near date expiry. Similarly, when you are sure about the intrinsic value of the securities or foresee the potential of a specific sector in near future than buying that Mutual fund will be the right decision. However, if a Mutual fund invest in securities that has less intrinsic value or the sector does not seem to grow in near future then investing in such Mutual funds will be a loss and so a wrong move. I hope that I have answered your question correctly.