Is this right time to invest?

A common adage which all stock markets investors will hear is that we should always “Buy Low and Sell High”. It’s absolutely correct and is the only way to earn money. But the big question is should we wait for stock markets to fall to their lowest levels to start investing.

The answer is that it is impossible to predict the exact stock markets levels whether in short term or long. Don’t even go for anyone who says he know when markets will fall or rise by say X% in Y months. It’s simple IMPOSSIBLE.

So we come to our question that many investors seek :  Is this right time to start investing? The answer is simple. The most opportune time to invest was Yesterday. Today is the next best time. 

Act now, don’t waste time

The first step would be stopping procrastination and start investing. We see many people who postpone investing till year end when we need to file return for our taxes. If you don’t have time then consult a good financial advisor who will guide you in your quest for investment and wealth creation. A 30 – 60 minute meeting with your financial advisor can have dramatic impact on your future finances. Go for it. Don’t wait for markets to fall to some assumed levels to start investing. If you feel so, then read above paragraph once more time.   

Learn from Guru: Time matters more than timing

Warren Buffet, legendary investor and one of the world wealthiest persons is known to most of us. But do you know that he started to invest at age of 11 years. Today he is 88 years old which means, he has utilized the power of compounding for the last 77 years. He is known for long term investing rather than day trading and is epitome of value investing. One big lesson that we all can learn from him is that, “TIME IN MARKETS MATTER MORE THAN TIMING THE MARKETS”. He is worth whopping $86 dollars. But again one interesting fact. Do you know that 99% of his wealth happened after his 50^th birthday? Sound impossible. Then let me show one chart to you which will clear all doubts you may have.

We all know a game show on television wherein participant earn prize money by giving right answer to questions. The prize money usually doubles for each question. 

Sr No	Prize
Question 1	Rs 1000
Question 2	Rs 2000
Question 3	Rs 3000
Question 4	Rs 5000
Question 5	Rs 10000
Question 6	Rs 20000
Question 7	Rs 40000
Question 8	Rs 80000
Question 9	Rs 160000
Question 10	Rs 320000

Here we can see the prize money rises to Rs 3.2 Lakhs for question no 10. Note the sum of all monies earn from question 1-9 is equal to money earn from single question i.e. question 10. But can we directly go to q10? Answer is NO. We have to start small at Rs 1000 but be steady in game in order to rise to 3.2 Lakhs. Also note it takes 10 steps to reach Rs 3.2 Lakhs but only next 5 steps to reach dream figure of Rs 1 Crore. So what does this mean, it doesn’t matter when you start and how small. All matters is TIME. So stay invested for long term

Care for Taxes

When we say care for taxes we don’t mean section 80(c) only. This is because we see many people start SIP or other investment just for sake of it even though they can do much more. Today many of us carry home loan burden. Home Loan EMI (principle + Interest) along with mandatory PF leaves nothing to very less scope for further deductible investment under 80 (c). This doesn’t mean you shouldn’t invest and keep money in saving account or in FDs which earn less than inflation returns. But when we say taxes we mean future tax implications well. e.g. some investment can offer higher return on absolute term but when adjusted to tax, the returns will be less optimal. The decisions like, debt / equity OR short term / long term will have tax implications when you encash your investments. Also at time of redemption the kitty would be substantially larger than initial amount which means Tax implications will also be larger. So plan for taxes at inception only.

Take into consideration about are major expense in near future

This is very important criterion and here also you need to keep in mind tax angle. Also we suggest than if you have some big expense in next 1-3 years it’s better to park money in some good FD or liquid fund rather than going for equity. Also make sure that you have emergency reserve which equals to 3 months expenses in place before you start investments. So we suggest to undertake an exercise to list all short term / long term 'To Do' list and list down every possible expense that may come in immediate to medium future. FDs/ Liquid funds are best bet to park funds for these expenses.

Don’t listen to crowd / don’t be a sheep

Refer picture above. This is exactly what happens to common investors which lead to wealth destruction. They invest on noise, on tips received on SMS/ WhatsApp, rather than based on any scientific research. Today some investors pay excessive attention to what TV anchor says, if they are bullish then invest and withdraw when anchors turn bearish. Instead investors need to follow “Buy and Hold” strategy. Buy good stocks / mutual funds and invest in them for long term or till your financial goal is met. This is the best way to make disproportionate gains in long term.

Review

Needless to say you can’t do research once and forget about it. Govt Policies, tax regimes , business environment changes frequently and will have impact on your investment. After all its your hard earned money so you have to be vigilante. Unless your money is parked in FDs or in PPF, with ensure guaranteed rates, you need to check on your investments regularly to make sure they are performing as expected. But this doesn’t mean checking markets / NAV prices daily. If you are invested in mutual fund after due diligence, give it minimum 3 years before review. Review helps in identifying areas wherein you have made mistakes and helps in correcting them for future investments. Sit with your financial planner once in a year to take stock of your finances/investment and to check if your portfolio is on track or not.

About Us:        

We are a neo advisory firm that believes in Goal based investment. We offer investment services in Mutual Funds and also retirement/ Life insurance solutions. We have over a decade experience in finance sector. For any clarification / investment needs call us on 9325295502. We provide services across India. Also visit us on www.growwealthadvisors.com 

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