This is that time of the year, where many were in anticipation of correction in markets. All it needed was one cue and world-wide the markets are on the mode of corrections.
What are we supposed to do at this time?
If you are a long-term investor and have already an asset-allocation plan, please stick to it and continue with your investments. This ups-downs of the market is expected.
If you are a new investor to Mutual funds / Equities, stay on the course without panic and continue to stay put with your plan of asset-allocation. You are experiencing one of those emotions which you have not encountered in the past, but have patience and stay the course to reap the benefits of long term investing.
For those of you, who haven’t yet opted Mutual funds / Equities as one of the part of asset-allocation, its better late than never. Start investing and stay long to experience the power of compounding.
Having said that markets do fall and raise steeply, I would like to re-iterate the past phases of Indian Stock market.
|Year||Close Value of Sensex||Return||Investment Amt|
Since 1999 to 2017, in a span of 19 years sensex had five times –ve returns. What one needs to understand from this table is that the returns from equity / equity mutual funds comes from staying invested for long term. What is required is patience and ability to stay the course when market falls / corrects. These returns come from a combination of few good years and few bad years.
Getting panic and exiting in the bad year is one of the worst mistakes most of the investors do. It is important to manage emotions in such years to stay the course and reap the benefits of long term investing.
The only way to reach financial independence is by having :
a) a plan based on your requirements
b) understanding risk
c) sticking to the plan
d) Most important is ignoring the noise around.
What is in your control is your ability to save, your ability to control your emotions and what is not in your control is how various asset classes behave over periods of time.
Stay invested!! Stay away from seeing the portfolio when you are a long-term investor investing for your financial goals.