Investment is one of the most common practices carried out people, who dream of making it big in their life. Everyone has certain plans or dreams for the future that they would love to see being fulfilled. These dreams may vary from person to person, but the method to achieve them remains the same. Investment is thus a crucial way that can change lives for good.
But sometimes, it gets too late to invest in the stock market. Relatable, right? Well, I am sure you must have heard about it or maybe experienced it yourself. When you are late in investing in the stock market you worry about losing out on potential opportunities as well as time and thus ponder upon the thought, "How will it affect my finances?".
Well, as worrisome as it can get, you are asking the wrong question! It should be 'Am I too late to invest in the stock market?' instead! And the truth is that you are not and it entirely depends on the stage of life you are in. It's like asking if you are too late in getting into a relationship. Just as while building a good relationship, you invest fully knowing your expectations and go through the ups and downs.
What should you as an investor do?
Despite the recent downfalls, Sensex and Nifty may still attract a lot of attention. If you are debuting in equities, you might worry about catching the equity market during its low phase and thus making big losses. But there is actually nothing to worry about if you are for the long haul like 10 – 15 years.
The power of compounding ensures that you make good inflation-beating returns regardless of your entry time into the market. Being in the field of financial investment for a long period, we would advise you 4 steps that you can take in this respect. They are:
- Focus on your time in the market - The first thumb rule is to not make any attempts towards timing the market. Instead, your focus should lie on the time you are willing to spend in the market. The longer you remain invested, the lower will be the possibility of a loss in your investments. There have been situations where the market has really tested the patience level of investors. For the eight-year phase (1993-2001), Sensex remained at about 2900. But what followed, was an immense bull rally that took the market to levels of 20000 by the end of the year 2007. Therefore, it is advised that you invest in funds like mutual funds and give more than 7-8 years time to reap off its full benefits
- Look beyond the indices - Equity indices such as the Sensex or Nifty are quoted in the media as a barometer of the Indian stock market. This index shows the combined stock movements of 30 or 50 stocks. But there is an excess of 5400 stocks listed on the Bombay Stock Exchange itself. Successful investing is about selecting diversified stocks of companies with good fundamentals as well as a reasonable margin of safety. A strategy aligned to the long-term goals will ensure that you earn inflation-beating returns irrespective of the ups and downs of the Sensex. You need to invest in a planned way. Come to us and we will help you out in this. You can also receive the best mutual fund investing advice from us.
- Systematic investment - Investors who act smart choose a diversified portfolio of equity funds based on their goals apart from the history related to the performance of their funds. Also, by automating investments through SIPs you can invest without thinking of timing the market i.e catching market peaks or troughs. Systematic investment has its own range of benefits and therefore, every investor should indulge in the same. You can achieve the most stunning results through mutual fund investments
- Look at the facts - In the past, the world economy has fared badly due to recessions. The Middle East has seen multiple wars that have resulted in chaos. Oil prices touching the $140 per barrel has led to an increase in inflation across the world. And the worst, several scams have rocked the stock markets. But, amidst all these happenings, there were many Indian companies that have improved their earnings at a fast pace. They have handsomely rewarded their investors through greater stock price appreciation. The Indian economy is developing at a faster rate than most other economies. The stock returns have impressed most and are reflected in the economic growth as well. Therefore, start looking at equity investments in a comprehensive way and don't worry about the performance of the markets. For further investment-related guidance, visit Wealthclock Advisors