InvestorQ : Is it the best time to invest in mutual funds through SIP and sell the stocks?
Mitali Bhutta made post

Is it the best time to invest in mutual funds through SIP and sell the stocks?

Dawn Cherian answered.
2 years ago
I think basing your investment decisions solely on market movements is not the right way to approach it.  Stock markets tend to be volatile, which means that price movements are like a roller-coaster, it has its ups and downs.  No one can predict the next phase of the market and anyone who says that they can doesn’t know what they’re talking about. According to me, “time in the market” is more important than “timing the market”.

Stocks market's inherent feature is volatility. So, you can be sure that if they are at high now, there will be a cooling-off period too, which will be a good time to make the investment. Investment in stock markets is beneficial only if you give it time. Stock investing allows you to take advantage of the power of compounding, which grows your wealth exponentially. So, I would suggest you take some time in choosing good quality stocks, and then stay invested at least for a period of 10-15 years.

Having said that, I would also like to emphasize that you need to make investments that suit your financial and risk profile. Direct investment in equity and investing through mutual funds are both ways of creating wealth over a long investment horizon. However, what needs to be understood is which of the two ways fits better with your investment needs. If you are a novice in the stock markets, then investing through mutual funds (MFs) is the right way to go for the following reasons: 

a) It is not as risky an investment as direct stock buying as it is managed by experienced and capable professionals.
b) Buying or selling a stock/company requires extensive research and in-depth knowledge about the company and the sector it performs in. Fund managers have a team dedicated to this research.
c) Diversification is another key advantage MFs have overstocks. By investing a smaller amount of money, an investor can get a diversified portfolio by investing through MFs.
d) MFs help mitigate risks better than stocks as the risk is spread over a larger basket of stocks.
e) MFs are better tax-saving instruments too as there as one does not have to pay short term capital gains tax (STCG) if the stocks are sold before 1 year. 

All in all, in conclusion, both ways of investment aid wealth creation. However, if one is new to investing in stock markets and not comfortable and/or confident with investing in equities directly, mutual funds are the way to go.