Corrections Do Pay Off

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Corrections Do Pay Off
Anil Jhanwar - 01 March 2021

Gunjan Agarwal is an entrepreneur running a food parlour. Her world revolves around her two children. Her main aim is the well-being of the children, their education, marriage, and lead a happy life during the golden years of her life. She would invest all her money in traditional products till she met Anil Jhanwar from Invest Search in 2010. After a few rounds of discussions, Jhanwar understood her aspirations and chalked out a sincere financial plan.

Since Agarwal was not exposed to the equity markets, Jhanwar did not insist her on investing a lump sum there. Instead, Systematic Investment Plans (SIPs) were registered. Her first SIP was started with Rs 10,000 every month. Since her financial goals were for the long term, the focus was on wealth creation through equity-oriented funds. However, Jhanwar also acknowledged the need for a balanced approach towards investing, and the monthly investments were partially diverted towards hybrid funds. This assumed importance for her. A pleasant investment experience helped in strengthening her confidence in the markets. A bad experience with the loss of investment capital would not have been desirable.

As luck would have it, the markets remained range-bound for the next three years, resulting in negligible returns of only 3-4 per cent per annum. This made Agarwal a little impatient with her investments in mutual funds. She considered her traditional investment strategy better with sound returns at a lower risk.

She started expressing her concerns during the periodic portfolio review. As the SIP investments were not yielding the desired results, she was inclined to discontinue them. Jhanwar, however, continued to convince her about the benefits of consistently investing in the markets. He conveyed the benefits of investing during the market corrections, emphasising how she could manage to get higher units during a market rally.

The markets always test the patience of their investors. And the times were not favourable for the new investors like Agarwal owing to dismal returns. She was always reminded of her financial goals, especially about accumulating the desired corpus for the education of her daughter Nandini. When the SIP was started in October 2010, Nandini was just five and Agarwal had desired to accumulate a corpus of at least Rs 25 lakh for her education by the time she turned 18. Her emotional attachment with this financial goal was enough for Jhanwar to motivate her to continue with her investments in the markets. He gave her the confidence and continued to guide her during the tough times.

While her investments were giving a Compound Annual Growth Rate (CAGR) of a mere 4 per cent till October 2013, the market rally that followed owing to the emerging political scenario in 2014 gave her handsome returns. Her portfolio almost doubled. With her portfolio generating a CAGR of 25 per cent by October 2014, Agarwal seemed delighted. Jhanwar also used this opportunity to top-up her SIP investments, with an additional buffer for her financial goals.  He further discussed investing in other schemes like equity diversified along with investments in balanced funds, debt funds, and liquid funds for different time frames. With regular investments in the markets, balancing the risks, Agarwal’s overall experience was quite good. She was in control of her imminent financial goal – her daughter’s education.

Regardless of the turmoil in the equity markets followed by the corrections post-pandemic, Agarwal continued to trust the markets. Her confidence in the markets across the periods has proved to be a blessing. She has been rewarded handsomely with a rebound in March 2020.

Jhanwar had a curious, yet delighted investor in Agarwal. He helped her to accumulate funds to meet her financial goals and hand-holding her during the market corrections was indeed helpful. Happy investing!


Along Gunjan Agarwal’s journey into investment, patience and learning

Link your investment in mutual funds to your goals

It is always beneficial to link the investments with specific financial goals. Agarwal shares, “While I was not much convinced to continue investing with lower returns for the first three years, the motivation came from investing for my daughter and her bright career.” As such, it is always fruitful to link your goals and investment strategy. Jhanwar also adds, “This can also help in selecting the right mutual fund schemes best suiting the investors’ risk appetite.” Further, the investment horizon for the financial goals can also be instrumental in making the selection of the right mutual fund scheme, as different schemes may be suitable for different time horizons. For example, an equity fund may not be suitable for a short-term goal but long-term goals. Similarly, debt schemes may be desirable for long-term goals like retirement planning.

Watching the portfolio daily does not help

It is always beneficial to keep your eyes away from the daily portfolio valuations since markets are inherently volatile over the short-term. Watching the valuations daily may make investors nervous as Agarwal had faced once. At the same time, one should be mindful of the rotten apples in the portfolio. For this purpose, a periodic portfolio review is always beneficial, which should be undertaken at least once a year.

Trust your financial advisor

Financial advisors act as the guide to the investors in their journey. Since they have experienced the market cycles, they can be a better judge. Further, they can also guide the investors through the market corrections and partner with them during the rallies. In Agarwal’s case, Jhanwar’s guidance during the period of dismal returns helped her continue with her investment journey. Had he not convinced her, she would have redeemed her investments and missed the next market rally in 2014.

Anil Jhanwar, Mutual Fund Distributor


Financial Planning of Gunjan Agarwal is based on the “personal opinion and experience” of Anil Jhanwar, Mutual Fund Distributor. It should not be considered professional financial investment advice. No one should make any investment decision without first consulting their advisor and conducting research and due diligence.

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