Should you continue with equity investment during an economic downturn ?

While  PPF is earning an 8% return,the equity fund is generating a low return. Most of investors are wondering if they should stop the SIPs in equity fund and invest only in the PPF for safety and return.



It is important to understand that when a goal needs growth,it is good to invest some money in equity.As an asset class,equity goes through economic cycles,and the current low level of returns is due to the down cycle in the Indian economy.By investing during this phase, it will allow the money to enjoy the benefits of the next up cycle.If you stop the SIPs, you will find that the overall returns after 15 years will be significantly lower,both on account of not investing in equity,and from investing,if at all,when the markets are higher.

An asset allocation strategy of below method is a good way to manage risks and earn a stable long-term return.
The downside risk from equity is arrested by the investment in the PPF,yet the upside of the portfolio will be capped at 8% if you were to invest all his money in it.

The goal for each of us individual should protect the investment from another possible downturn in the equity markets.Therefore,after staying invested in the next up cycle in equity,we should book out of equity with 3-4 years left for the goal,and put the money in the PPF or any other debt product (if the PPF limit for annual investment is breached) to protect the corpus.