Don’t waste money waiting for the market to change – The New Indian Express

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Express news service

The index reached 60,000 (Sensex). Is this a good time to sell stocks and stay on the sidelines? Should I stop my SIP and start over after a while? Should I reduce my SIP in large cap funds and invest in mid cap funds?

I was asked these questions at 25,000, 35,000, and of course 50,000 and now 60,000. The truth is, I have no idea. It sounds like a simple question, but it contains the following questions: Will the market fall from here? If it falls, how long will it stay? When should I start buying again? When do I have to start the SIP again? Will mid caps outperform large caps? To what level will it fall? Should I start buying in 2/3 months or wait longer?

Honestly let’s say I say to the reader “I think the market is too high, you should sell your large cap stocks (Sensex stands for large cap stocks, right?) And wait” – and the reader the fact. Suppose then the market goes to 62,000 in a week – then drops to 55,000, do you think the reader will be happy?

No. Maybe he panicked and bought again at 61,000 and felt good at 62,000. Or he could curse me for the wrong advice – or a bad read of the market. Later he is likely to tell me “You could have asked me to sell at 62,000 instead of 60,000”.

People anchor themselves around round numbers like 50,000 or 60,000 – maybe because it’s easy. In fact, it is just a number and has absolutely no meaning in the life of an index. Most of us know that saying “now the market will do this or that” doesn’t make sense – however, it attracts a lot of readers who think there is a simple answer. In the long run, in order for a person to make money, it is not really necessary to be able to predict how the market will perform over the next month or quarter.

If they are optimistic about the outlook for the world or for a particular country, they should simply invest in that country’s index. Still not sure which country will do well? The best fund in which to invest is then a global index. It’s that simple. There are enough people who will tell you that people have lost money while waiting for the market to change – and the opportunity lost in the meantime is really huge.

If you are truly a long-term investor, don’t wait for the ‘Market to correct’ – it is difficult. Just start a SIP and keep investing regularly. If you see the markets going down, just put a lump sum into the same fund every now and then. This will ensure that you build up a decent amount of time over the next several decades – and you will have enough money to meet your goals.

PV subramanyam writes on www.subramoney.com and is the author of the bestseller “Retire Rich – Invest C 40 a day”

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