Investing is Simple, but not Easy

If you ask someone what’s the most difficult part in managing finance, the answer will be spontaneous – the investing part. Because, the moment we decide to invest some part of our savings we get to ask lot of questions to ourselves. Is it the good time to invest in equities? Which fund should we invest in? Largecap or Midcap or small cap or multicap or Debt or Gold, the questions are plenty? But, Investing is the simplest part of financial planning, not that i know the answers for the above, actually i don’t and neither anyone else know the answers.

So, what should we do? Ascertain your risk, asset allocation mix, investment time frame and execute. And once you are sure that you have the basic matrix right, just ignore what’s happening in the outside world regarding the markets (unless and until it’s going to affect your portfolio fundamentally) and stay invested. Almost all Advisory say one thing in common “Time in the market is more important than, timing the market”.

Because, let it be stocks or gold or debt each asset class will have some negative phase, it can be for short term or long term, but instead of capitalising on the opportunity our mind thinks the opposite, should we sell and get away. In fact stock market is the only place where people shy away from investing when a sale is in process.

The problem isn’t only that we are impatient. It’s the volatility attached to equities that makes our Investment life miserable. There are lot of examples where stocks which has seen several drops had given great returns, provided if you had held on to it. Apple stock from its IPO in 2012 to current price you could have multiplied your money by 250 times, but for this the stock had a fall of almost 80% twice and 60% in 2008 and there were several 40% plus fall. Netflix which is another multi bagger stock has fallen by 25% at least four times and once by 41%.

There are a lot of examples in the Indian stock market too; i read in one blog (www.getricher.in) that Rs. 10000 invested in Wipro stock in 1980 the current value is Rs. 742 crores, lot of other names CUB, HDFC Bank, HDFC ltd, Reliance etc.

Stick to your plan, avoid unwanted noise. Stay Safe & Stay Invested!

Happy Investing!

R♥Vi