Markets are at an all-time high with almost 60,000+. Given this bullish market, should you invest in equity? Or the markets are chirpy and volatile… should I wait for a better time? But when the markets are actually low, and ideally, we should buy the dip, is when we are most scared of the uncertainty of the event that led to the dip, that we invariably end up not buying the dip… i.e. most often than not.
Equity investments usually promise attractive returns. But it has its associated risks too. The doubt that most people have is whether to invest in equity now or wait for a correction.
So, if you want to understand if it is a good time to invest in equity now, read on…
Investing in Equity Market:
Before you actually take the plunge and invest in equity in these rising markets, here are some facts to know:
- Systematically Invest in equity
The easiest way to beat the volatility and yet be a part of the bull market is to systematically enter the market. SIP or STP is the ideal way as it averages the cost and the associated risks. So, if you are a long-term or a new investor, opt for the SIP route to enter the market.
In those ways, you not only beat the volatility by disciplined investing, but you also save on the risk of a correction. Alongside you also get the rupee cost averaging. This has been the proven and the smartest route even for seasoned investors, especially in a volatile market.
- Wait for corrections to enter
Markets will correct itself and continue to be volatile. But that doesn’t mean your financial planning should be timed as per the whims and fancies of the market, right? You can always buy the dip, if possible and then ride the wave.
However, just remember that the basic fundamentals of the economy are quite strong. Even the technical analysts are extremely bullish on the market. A short-term investor typically works on a stop-loss strategy. While a long-term investor must look for correction opportunities.
- Remain invested
Profit booking strategy will always be prevalent. However, that should only be a part of the investment and not the whole. In those ways, you secure your investment but continue to grow with the market upswing. Most importantly it should be planned well in advance and executed in a timely manner. Even if you wish to exit, do it systematically through the SWP route and not overnight.
However, if you wish to exit the market, then you must do so only if you urgently need the money or your financial goals have been fulfilled. If neither of the reasons is pertinent, it is best to remain invested. The easiest way to make wealth by investing in the asset class of equity is to remain invested even if there is a market correction.
So, you need to have patience. As Warren Buffet mentions, “Investing is like watching paint dry or grass grows. If you need excitement, go to Las Vegas”.
- Stick to your asset allocation
If your asset allocation indicates equity exposure, then you must hold on to your equity portfolio or even increase it. The current rally might continue a little longer before being stagnant again. But if you stick to your asset allocation, you cannot go wrong on that as it would be applicable to your overall portfolio with an insight into your financial goals.
- Invest with a long-term perspective
Equity is a long-term investment. The short-term corrections should not be a hindrance to your long-term investment strategy. If you stick to your basics with the right asset allocation and systematically enter the market, your volatility risk is also reduced. This is the only way you can build your healthy investment corpus in the long run.
So, even if the market corrects, give it time to recover and rebuild itself if as you have a long-term perspective.
- Look for professional advice
If you are still unsure of what to do, look for professional help. They are in this business and understand the market better. You can always follow their advice and then decide on your investment strategy.
So, technically, you cannot calculate the exact time when you should invest in the equity market. Systematic investment is the most prudent financial decision and the “time-in” of the market is always more important than “timing” the market.
Invest in equity but with both eyes open. For further assistance and discussion, you can always get back to us. We are here to help.
