In these turbulent times with stock markets witnessing some of the biggest single day, single week losses, and the apparent root cause of US recession still looming large, retail investors have been shying away from the markets.

Most investors tend to get confused while choosing dividend or growth option when applying for a mutual fund. The real choice should not be so difficult to make.

Ask yourself a simple question, do you need the recurring income for yourself or the income so received in the form of dividend has to be reinvested again. If you have some other regular source of income then by choosing dividend option you are again creating a fund, which would be small in size unless augmented by other income, and won’t be of size that could be invested again in good channel of investment.

With 2007 ending with highest annual gains in the indices, and reality sector prices sky rocketing, Investment in Bank fixed deposits are not likely to pick up at least till first two calendar quarters of the year.

Year 2006 saw the markets tumbling from 12000 to 8800 levels, though the markets partially recovered their losses in the later part of the year. Year 2007 witnessed the markets touching new highs. The year also would be remembered as one of the most volatile years in the stock market history of the country where gains or losses in a single day were equivalent to what were witnessed over 3 months in the past.

At this level of sensex, one needs to invest very cautiously, even if it means not earning money. Losses, at this level can be enormous, especially for those who invest in MidCaps or Small Caps for better returns in short term.

Yesterday, the markets touched historic high and came out of teens with sensex touching 20000. Along with this, nifty touched 5900 and appears raring to cross 6000. The 700 point plus rally was one of the five biggest rallies in countries history.

Of late the markets have registered quite steep growth which was unbelievable just 20 months before, when many reputed brokerage house and financial analysts were predicting the fall of sensex to 6000 levels. Volatility in any stock market world wide is a regular phenomenon but the market swings in India are for too trivial issues and to some extent predictable.

Reserve Bank of India has announced its Credit Policy hiking hiked CRR by 50 bps to 7% from 6.5%. However, repo, reverse repo and bank rates have been left unchanged.

Market has taken the news with negative stance and the nifty that touched high of 46 points in the day registered a fall of 13 points.