Want to make money in the stock market crash? How mutual fund investors can make most of it

Stock market crash: Mutual fund investors with high-risk appetite always look at a share market crash as an opportunity to invest with a long-term horizon.

In the stock market crash, STP with a six-month horizon of investment is better than one-time lumpsum amount investment, say experts. Photo: Reuters

Stock market crash: Mutual fund investors with high-risk appetite always look at a share market crash as an opportunity to invest a lumpsum amount in the equity-linked saving schemes as it helps them get more number of units. According to the investment experts, an investor who has high-risk appetite can seek an opportunity when the market heads southward. As the Indian indices are at four and half months low, investors have a good option to go for in terms of mutual fund if they have surplus funds to invest, say experts. However, they say that the investment should be for long-term means of at least five years.

Speaking on how to make most of the stock market crash in mutual fund investments Manikaran Singh, a SEBI registered tax and investment expert said, "In crashing market with 2-3 per cent correction at Indian indices, a mutual fund investor, the one with a high-risk appetite, can opt lumpsum investment in an equity mutual fund as it allows them to get number of units prior to a few months back. However, it may happen that the stock index further goes down and his or her investment may not look a smart move to go for a lump sum investment when the stock market is on southward trend. So, such investors can go for the STP (Systematic Transfer Plan) with a six month period in perspective. In this plan, one can go on adding if the market further goes down for another 2-3 per cent maybe 5 per cent." He advised mutual fund investors to add when the market goes down by around 1 to 1.5 per cent from his or her investment levels. So, rather investing one time a lumpsum amount, it's better for a mutual fund investor to opt STP and make most of the stock market crash.

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Speaking on which type of mutual fund would be advisable for such high-risk appetite investors Jitendra Solanki, a SEBI registered tax and investment expert said, "For mutual fund investors with high-risk appetite, small-cap funds are the best as it moves faster and gives better returns than mid-cap or large-cap funds. But, the investment should be in a long-term horizon." On how much more a mutual fund investor can earn by opting a small-cap mutual fund Solanki said that small-cap schemes give around 12-13 per cent post-tax returns if invested for more than 10 years while others would give around 10-11 per cent post-tax returns, however, selection of the mutual fund category fully depends on the risk-taking ability of the investor.

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