Should we invest in Mutual Funds now before Elections

Our Indian stock market is very volatile for last couple of months. Major markets like NSE and Sensex rise up to 9% for the month of March but still it is very volatile. Markets may becomes stable after election only depends upon the ruling party.

I am advising you not to invest any lump sum sound in any form of investment in stock market now. If you want, you can follow a systemic investment approach and divide your lump sum amount and invest it in a regular interval.

Many of the mutual funds are not doing well. Of course there is a little upwards movement in March. However the position will be known only after the elections and depends on the party which is going to form the government. So it is a chance taking only to invest in MF. Yesterday I was discussing with one financial advisor who says the position will improve after election results are declared and he is advising me to wait for another two months before discharging my present investment in MF. So I feel you can try some amount investing in MF. But to select the correct company you have to discuss with a good financial expert and who studies the market well. Of course SAP is always safe and better. But the gain will be in proportion to your investment.

Till the elections, markets will surely be remaining highly volatile. It is obvious that elections do impact the stock market. Predicting the market is a strenuous task and no one can do it accurately. On the other hand, you can invest as instead of timing the market, look from a different perspective.

Mutual funds investment is recommended for 3-5 years. Mutual funds are for long returns. You don't have to consider it if your aim is to attain short goals. Moreover, you can always add more money on days the markets are high by 2- 4%. In case the market fails, do not bother yourself. It is because you are going to enjoy good returns at the end.

The market is ad can be fluctuating or volatile for a period from now.
There are a few factors which are going to influence the market.

The first one is elections. Various surveys are giving various indications. If the market gets a feel that the election results are not giving a stable majority to one party or the ruling party may not get an absolute majority etc, then the market may see some volatility and may lose. However if the consistent signals are that the ruling party and Modi is going to have a better and more stable second term then the markets ma bounce.

The other factor is predictions about Monsoon. A good monsoon prediction signals good agriculture and markets may gain. The opposite also can happen.

There can be many unexpected external factors influencing market.

It is not easy to react and respond based on each pulse. For an investor market investment can bring gains on long term.
Prices going down is an opportunity also to buy good funds/stocks. If one does homework and invest on funds/stocks having good fundamentals and management and business prospects then one can stay invested for long term and get gains. Alternatively one can go for Systematic Investment Plan(SIP) which gives the benefit of averaging in a fluctuating market.

If one waits the waves to abate to take bath in the sea, it may no be possible. Market investment is also like that. There is always a risk element. Prudence and calculated risk is needed.

Predicting the direction of stock market is always a difficult task even for the seasoned players and the highly qualified stock analysts.

There are two main things that affect the stock market in our country. The first is the growth of the industry and other is the political stability and conducive environment for the business.

When both the above are favourable then there are bright chances that market will rise.

We do not know the election results and we also do not know whether the industry is really going to do good in the near future because if the demand of the products dwindle, the industry suffers. So what is the way out?

Stock market, whether it is mutual funds or shares or bonds is a long time investment avenue. Those who want to invest before the event (like election) and make the quick profit after the event are sometimes badly hurt and lose their money and then never recover from that setback. It has happened in past and can repeat at any unfortunate time. Doing this type of investment is like a gamble and those who are habitual of this gambling can certainly put money before the elections and if a majority Govt comes in power and industry also progresses there will be a very good gain within a time frame of 4-5 months. Only thing is we have to select the mutual fund schemes which have a good past performance history so that in all probability these will yield good returns.

I can give you some general guidelines in this matter which might create a good fortune in the long run in mutual funds. Whether you invest before the elections or after the elections is a difficult decision and the best thing will be to divide your investible amount in two parts and invest one part before the elections and the other part after the elections and that will give you an affect similar of SIP techniques followed by the investors. Now whatever you invest in MF schemes I will suggest that you stay in it for a long time at least a horizon of 10-15 years because before that you may not be able to reap the real benefits.

In case the election results and industrial growth favours the market then there is one possibility (gambling) of market suddenly going to the dizzy heights and you can take a conscious decision of selling all your holdings and pay some little income tax and keep your wealth in the bank FDs etc. Many people do that and then never come back to the stock market after making a big mullah. Stock market is a risky place. There are so many risks associated. The gullible should enter this arena with precautions.

Mutual fund is a safer investment option as compared to the shares. There are many MF schemes which have performed nicely in the past.

The mutual funds are also dependent on the share market. If share market does well, naturally the mutual funds will be benefitted.

Generally, after election if a majority Govt comes, the share market goes up and from that point of view one can invest some money in mutual funds. Even if the election results are not favourable, one can keep that investment for a longer period.

So it will be advisable not to put large amounts of money as the election results could go to any side.

Please remember, if there is no risk, there is no gain.

I am assuming that you want to know about investing in equity-based mutual fund. No one, not even the topmost investing experts, can predict the market movement, especially when the election is around the corner. So, it would be fruitless to ask or answer about market movement in the present situation.

So, I would advise you to put the lump sum amount which you possess in a liquid mutual fund, and start investing in a gradual manner in one or two very good equity-based mutual fund(s) based upon your risk-taking capability and time-frame by transferring a fixed amount from the liquid fund on a particular date of the month.

Mutual investment are safer than the other instruments such as equity funds, debt funds, balanced fund etc. Hence one can safely invest in the mutual funds but the immediate profit with such investments should not be our objectives.
The market is governed by innumerable factors and any decision taken by the Goverment or any adverse development in the international market may impact the performance in the negative side.
Now during the election regime, the maket would see many fluctuations and this may cause some disappointment to the investors but such a case would be a temporary phase and once the election is over and the foreign sentiments are favourable, the funds would show escalation in terms of original price. However, profit should be seen as a long term growth and one should remain invested for at least three to four years. If the price peaks up even after a year, you may go in selling considering the various factors affecting the future growth of such funds.

Election will be playing vital role for investment and also will impact on Share market. This could also impact Mutual Fund but if you choose best mutual funds that too for long term then it will give you best return whatever could be result of election. SBI is one of them and it is doing great till date and furutistic is good too. Banking sector is one of the best option for investing in Mutual Fund, however study and check past results before investment as its risk area about investment.