Should I Stop Investing in an LT Emerging Business Fund Now?
Earlier, it has been advised to continue your investment in an LT Emerging Business Fund amid market corrections. It is crucial to understand that at this juncture, redeeming your investment could significantly impact your overall returns, turning potential gains into losses. This article explores the reasons why continuing your investment is advisable, especially for long-term investors.
Understanding the Fund
LT Emerging Business Fund is a Small-Cap Fund designed to generate good returns over a long period, typically 7 years or more. Small-Cap funds invest in companies of a smaller size, which can offer higher returns but also come with increased volatility. Your current fears of volatility may make it challenging to stick to your investment, but maintaining your commitment could be strategically beneficial.
The Importance of a Long-Term View
Consistency is key when investing in Small-Cap funds. If you are a Systematic Investment Plan (SIP) investor, continuing your investment will enable you to purchase more units when prices are low, thereby strengthening your portfolio for better long-term returns. The market swings that you are witnessing now are temporary fluctuations; they do not represent the true value of your investments over a longer timeframe.
Considering SIPs and Emergency Needs
If you do not have any immediate financial obligations, it is advisable to stay invested in the LT Emerging Business Fund. Even after the market recovers, maintaining your investment for at least 7 years can help you maximize the benefits. Financial advisors suggest that it’s a robust strategy to stay committed rather than making short-term decisions.
For those considering a SIP, initiating or continuing it now can be particularly advantageous. By taking advantage of lower market values, you can accumulate more units, which will pay off in the long run. Whether you are a seasoned investor or new to SIPs, understanding the nuances of Small-Cap funds and the benefits of long-term holding is crucial.
Specifying the LT Emerging Business Fund
It is important to note that the LT Emerging Business Fund falls under the category of Small-Cap funds, which carry certain levels of risk. While this fund has historically provided good returns, it is advisable to diversify your portfolio by including mid-cap and large-cap funds as well. This diversification can help balance the potential risks and reward, ensuring a more multifaceted investment strategy.
Shifting to Workable Alternatives
If you have a strong affinity for investing in Small-Cap funds, you may consider other options such as the SBI or Axis Smallcap funds. These funds also offer the opportunity for long-term gains, especially if you are willing to endure the fluctuations over a period of 5 to 10 years.
Final Thoughts
Ultimately, whether you decide to continue investing in the LT Emerging Business Fund or make adjustments, it is critical to maintain a long-term perspective. The current market correction is a temporary phenomenon that is likely to pass. By staying invested, you can create a robust portfolio that stands the test of time. For additional insights and guidance, consulting a financial advisor is highly recommended.
Just ask yourself why you started on this journey in Small-Cap funds. These funds are intended for a minimum of 10 years. If you are serious about your investment, it is advisable not to exit the fund, as market recoveries often bring significant long-term gains.
In summary, while it is normal to feel apprehensive during market downturns, the strategic advantages of continuing your investment in an LT Emerging Business Fund outweigh the short-term risks. By maintaining a long-term view, you can navigate the volatile market and achieve your investment goals.