Exit only if you require funds now, first-time investors much better off with SIPs

Just about two weeks ago, the sensex was hovering near the 30,000 mark, after rallying about 2,200 points in 10 days. The rally has started about year and a half ago in September 2013, when the sensex was near 20,000, and the index now up almost 50%. Latest data show that retail investors are yet to participate in the rally, as it happens in most bull rallies. However, one heartening fact is that mutual fund houses have seen inflows of about $8.5 billion (about Rs 50,000 crore) in equities since last May .

Then there are those who invested in the market but are confused whether to book profit, partial or complete, and take money off the table. For everyone, the question is what to do during the current market situation.

if you are already invested in the market, you should not worry and should not change your portfolio mix. There is much better time ahead.

If anyone is looking to book profit just because the markets are high, it is not the right decision. do you need the money now? If the answer is yes, then only you book profit. Else, you may have to regret later...what if you sell at 29,000 (level for sensex) and it goes to 35,000 after you have sold.

If someone had drawn up a financial plan and the requirement of funds was factored in, in that case the investor should have been in debt products by now, and not equities.

However, what about those who have not invested in the market and now the feeling of being left out is building up. In such a situation, one should not jump into the market all of a sudden and make a lump sum investment. It should be through the systematic investment route. If you have some money to invest in the market, spread it to invest each month equally so that even if the market suddenly slides, no large loss will stare at your face. A strategy to spread out your investments over several months will help to balance you out in case there is any market correction.

If someone is planning to invest in the stock market, it is best to invest through the mutual fund route and not directly into stocks. It is not justified to treat mutual funds and stocks with the same scale. A mutual fund house is like a garden where you can get fruits, vegetables and flowers of various types within one compound. And here the fund manager is the gardener who understands the garden very well. On the other hand, investing in a particular stock is like choosing to bank on one plant within a garden.

So, for retail investors who want to invest in the market for the first time, let the gardener take care of the garden and you go with the garden and the gardener