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Is it advisable to sell all my holdings and park the money in liquid funds?

You should stick with the growth option in the funds that you are investing in
By OLM Desk | July 15, 2017

I am 30 years old and for the past four years I am investing in seven funds for my retirement. I am doing this for the past 4 years. My profits stand at 20-25 per cent; is it advisable to sell all my holdings and park the money in liquid funds and do STP (for 1-2 years) into the same seven funds while I continue my SIPs in them? I am scared of the present high levels of the Sensex. What do you advise?

Ramsundar Shenoy, Bangalore

When investing for the long run with SIPs, you need not worry about market fluctuations because rupee cost averaging takes care of the volatility and changes in the way the markets and funds perform. As your retirement is another 25-30 years to go, you have age on your side and would have experienced the benefits of investing through SIPs in funds that helps averaging your acquisition cost and like you say does away with timing the market.

Moreover, in the long run the power of compounding will also play a big role in adding to the corpus that you build. You should stick with the growth option in the funds that you are investing in and at best move to debt funds as you approach your goal than book profits at this moment only to re-invest it again. Also, seven funds are too many to stay invested in – reduce your holdings to 3-4 funds and that should take care of your financial goal.

 

olmdesk@outlookindia.com

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