Mutual funds are among the most popular investment options available today thanks to the ease of investing, diversified options, liquidity, and tax benefits. You may choose one of the many ways available to invest in mutual funds and do so at any time.

Currently, everyone is talking about the recession. So, should you wait? No! Now is a great time to buy mutual funds. Here are some reasons why you should invest and stay invested in mutual funds now.

The SIP route

Under a Systematic Investment Plan (SIP), you invest a predetermined amount every month in a fund you have chosen. You set a standing instruction so that it happens automatically until you stop it, or all the installments are completed as per your plan.

The advantage of the SIP route is that when the market is down (as during a recession) you will be able to purchase more units of the fund for the same amount of money. When the markets eventually bounce back, you can sell the same units for a higher price and make a tidy profit. This is the magic of rupee cost averaging.

So, start or continue your SIP. You will be able to make the most of the recession situation.

Invest in gold funds

Diversification is essential for growth accumulation. Gold is a great investment option during a recession.

Experts say that allocating 10% to 15% of your portfolio to gold can give you a breather in times of recession. You can invest in gold exchange traded funds (ETFs) or in gold bonds at regular intervals.

Choose medium-risk funds

If your risk appetite isn’t big, then you can look at investing in hybrid medium-risk funds (mixed with high-risk and low-risk funds depending on your risk appetite) comprising both debt and equity. During an economic slowdown, an all-equity investment could be risky and yield poor returns. As against that, this mixed bag can give you a modest return while also offering some cushioning as the market rides rough.

International investments

If there is an economic slowdown in India, you can gain by investing in international equities which give you global diversification. As these investments are not dependent on the Indian economy, any domestic fluctuation will not affect you. On the other hand, if the economy of the country you choose to invest in is doing well, you could earn a good profit. The return will be based on the currency of that country, and you will get the advantage of currency appreciation.

A recession shouldn’t force you to change your investment plans in mutual funds. On the contrary, this is the time you should increase your investments, if that is possible. It is a natural phenomenon for the tide to rise after it has fallen, so have patience and the market will see a rise in a short while. Have a diversified portfolio which can provide you the advantage of equity and debt funds at different phases of the economy.