The coronavirus pandemic has taken the world by surprise and dismay. Numerous people have lost their lives as well as their jobs because of this pandemic. That’s because the novel coronavirus has not just affected the physical health of the nations, but has also had an adverse effect on the global economy. Since the last three to four months, there has been a strict lockdown in the nation. Businesses, industries, offices, schools everything was shut. This caused an adverse effect on the mutual fund industry as well. For many months, the portfolio of several investors were constantly under threat.

Several incurred losses and out of fear of losing even further, many investors withdrew their mutual fund investments. Now what these people did, was it a good idea? Or should they have remained invested in mutual funds even though their portfolio had incurred losses? To understand this, we need to first find out what mutual funds are and how they work.

What are mutual funds?

Mutual funds are a pool of professionally managed funds that invest in Indian as well as foreign economies. Mutual funds carry a diversified portfolio. A single mutual fund unit is a combination of multiple company stocks. SEBI, the regulator of mutual funds in India describes them as, “a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in the offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced.”

What fund houses do is that they collect money from investors sharing a common investment objective and invest this pool of funds across the various money market instruments like equity, stock, bonds, call money, government securities, company fixed deposits, debentures, etc. Mutual fund investors are allotted units in quantum with the investment amount and depending on the fund’s existing NAV. The performance of a mutual fund depends on the performance of its underlying assets and the sectors and industries in which it invests.

Should investors continue investing in mutual funds even during the COVID-19 pandemic?

Some mutual funds like equity funds are designed for long term investments. Some funds like ELSS come with a predetermined lock period of three years. This means that investors cannot redeem their ELSS fund units before the lock-in period. In this scenario if you prematurely withdraw from your mutual fund investments, it is you who is going to be at loss. That’s because investors will have to pay a penalty for redeeming their ELSS units. Plus if you withdraw your other ELSS investments in a rush, imagine the additional tax that you will have to pay on all those withdrawals.

Also, equity mutual funds do not tend to get affected by the daily market upheavals. They are made for the long run and hence, one should not worry is their portfolio is temporarily affected. In fact, this is an opportunity for investors to invest more and buy more units since most of the NAVs have gone down. This is the best opportunity to benefit from rupee cost averaging. Historically, mutual fund investments like equity funds have given better results when one remained invested in them for five years or more.

In fact, investors should continue investing in mutual funds via SIP without worrying about the ongoing pandemic. They can even make the use of an online SIP calculator to get a rough estimate of their accumulated wealth from their current monthly investment. The main thing for investors to remember is to not panic. Continue systematic investments and you might be able to get closer to your ultimate financial goal.

Although equity mutual funds are the most sought after mutual funds by Indian investors, those are not the only mutual fund investment option available. There are some funds that invest in securities other than equity, like in government bonds, corporate securities, call money, certificate of deposits. These fixed income securities are known to general regular income. Mutual funds that invest in such money market instruments for income generation are referred to as debt funds. As per market regulator Securities and Exchange Board of India (SEBI), there are sixteen sub categories under debt funds. This categorization has been done for investors to be able to distinguish between the different schemes and choose what fits their interest.

Corporate bond fund are one such debt fund category preferred by those investors who carry a moderate risk appetite. That’s because a corporate bond fund allocates at least 80 percent of its total assets in AAA and AA+ rated bonds. As per data released by Association of Mutual Funds of India, corporate bond funds received an overall investment of a whopping Rs. 11,910 crore since the month of July, 2020. The ongoing coronavirus pandemic has led market volatility to its peak, thus forcing a lot of investors to rebalance their mutual fund portfolio with corporate bond funds. Debt funds that invest in lower credit rating bonds generally do so with the hope of seeking higher capital gains. However, such investments may not be able to withstand turbulent market conditions and hence investors prefer shifting to corporate bond funds as they invest in bonds with a far better credit rating.

But that doesn’t make corporate bond funds a completely safe investment option. After all they are mutual funds and we all know of the fact that investments made in mutual funds do not offer guaranteed returns. This is why investors are expected to determine their risk appetite before making an investment. Apart from this, they should also take a look at the past performance of the fund to get a fair idea about whether the fund holds the potential to help them with their investment objective. Now if you are someone who has been a conservative investor and looking to shift from those investment avenues to something contemporary, they can consider investing in corporate bond funds. Not only do these funds carry a diversified portfolio, but they also hold the potential to offer better returns as compared to traditional investments.

The ongoing pandemic has made banks reluctant to offer credit to companies with low credit ratings. Hence, investing in corporate bond funds makes a lot of sense at this point of time at least. Corporate bond funds have been performing better than other debt fund categories simply because they hold the majority of their assets in high rated company bonds. So instead of investing in funds that invest in low rated bonds with the hope of fetching higher returns, investors should focus on generating consistent returns. Because mutual fund investments should generally be avoided who have a short term investment horizon. Long term investments shun the possibility of investments getting affected by daily market upheavals. To invest systematically in corporate bond funds at regular intervals one can start a monthly SIP. A Systematic Investment Plan allows investors to invest a small amount every month and help them get closer to their investment objective gradually and steadily. One can even take the help of an online SIP calculator to get a rough estimate of their capital gains through their monthly SIP investments. If you feel that you need further assistance in making an investment decision, seek the help of a financial advisor.

Bitcoin is one of the many kinds of digital currency that you can use to pay for specific services on the internet. There are many reasons why people choose to pay from their anonymous Bitcoin wallet rather than using their debit or credit cards. By the time you are getting to paying with Bitcoin, many steps are involved. Ensure that you take the right steps to avoid losing your coins to hackers or scammers. Some of the top advantages of paying with Bitcoin are;

No banking fees

Banks are known to charge transaction fees for all that you make. This aspect is a turnoff for a decent number of the populace since the financial institutions charge exorbitant rates for their services. Bitcoin transactions are free of the transaction charges giving you value for your money. No fees are also charged for account maintenance reducing the cost of banking considerably when compared to the traditional forms of banking. Assess your bank for all the fees they charge for the various transactions. That number is reduced to zero when one opts for Bitcoin as a mode of payment instead. Important to note is that international transactions may attract a few, but it is significantly lower than that charged by brick and mortar banks.

Accessible

Bitcoin is a banking system that you can walk around within your mobile phone. All transactions for this cashier option take place online and at no point will you be required to walk to a land-based establishment for any issues. Most Bitcoin wallets are compatible with smartphones making it easier for you to access your funds wherever you are. Populations that have no access to a brick and mortar bank can also rely on this new system to acquire products and services and pay for their bills too. Additionally, the low charges for international transactions make this system the best for people who are in different continents of the world.

Anonymity

Unlike other payment systems that require a ton of information, Bitcoin does not need the personal details of a person to process the payment or even to get the wallet. The anonymous Bitcoin wallet makes it possible for you to pay for service and products on from virtual and land-based stores without sharing a shred of personal data. The purchases are discrete unless you choose to make the public for other people to see. The transactions are also untraceable, making this the perfect choice for a host of purchases that require one’s identity to remain in the shadows.

What makes Bitcoin payment stand out is the fact that it is peer-peer focused. This means that people on the same network can send and receive payments irrespective of where they are. Bitcoin is among payment systems that are not regulated by any government or control body. This makes the various transactions on the internet untraceable. The lack of regulation is a demerit, and this means that no laws will protect you against any harm caused by Bitcoin and the transactions from the same.