Elections! Should I Invest?

181125 – Not much ‘absolute’ movement in Sensex and Nifty since the last post of MarketFastFood, this is the advantage of not looking at the markets daily, you just witness the destination and don’t have to experience the volatile ride, what am I trying to say here? It’s this: If you look at the absolute movement since the last post the difference is almost negligible, but if you check the daily movements you would get shocked. We saw wild movements during the past fortnight. Hence if you need to have a peaceful mind then take help of money managers like VRIDHI and we take care of your financial planning while you concentrate on your work in the office.

Generally, one advice I give to people is: concentrate on your business or job, try to earn as much as possible there and invest that money with help of an investment advisor, who in turn would make your money work most for you. Most people who come to my office seeking advice have one thing in common, most of them would have few market mobile apps like moneycontrol installed in their smartphones and they frequently check them during the office hours. Keep in mind that in this competitive world you got to be indispensable, else… you know what I mean, thus focussing on your job becomes the most important thing.

There are few queries which are coming to me regularly from investors past few days. Let’s see them.

1. My investments both in equities and mutual funds are in negative past one year. Should I sell and come out and invest in fixed deposits?

Withdrawing your investments since the market has not performed in past is the most stupid thing a person can do. As a financial advisor, I always say that don’t come to market with lesser than 5 years as time horizon. Keep in mind that you are indirectly investing in businesses and no business can give you returns quickly. The fastest way to double your money is possible only at a casino and the chance still remains just 50:50

Stay invested, keep adding more on every dip. Buy when the market is giving you a discount.

2. State election results are around the corner and Lok Sabha will go to polls early next year. Should I wait?

These are just reasons to procrastinate! Sensex was started in 1978 with 100 points, more than 40 years up and we are around at 35000 today. Now go back and calculate:

How many elections have taken place in 40 years?

How many PM’s we have seen in the past 40 years?

How many scams we have seen in 40 years?

How many natural calamities have occurred in 40 years?

The list goes on…

Still, the Sensex has moved from 100 to 35000..! Great Job. Yes, I agree there would be volatility!

3. Since you yourself said there would be volatility, what should an investor do?

Volatility will surely be there, but that does not mean you should sell and sit in cash, volatility does not mean only downwards, it could mean upwards too! Hence selling and sitting in cash cannot be the solution.

Existing investors can reduce volatility by being more defensive. There are many ways to do it and you should call your portfolio manager on this.

If you are having fresh money you can split the investment over the next 9 months. It’s easier said than done, discipline becomes very important here. Can be done with help of mutual funds, a mutual funds adviser will again be of great help here.

You can also ask why 9 months? It could be 6 as well, or 12 as well. My calculation says 9 would be the best.

The answers to the above three queries should reduce a lot of confusion. Keep in mind, a Fixed Deposit has never made anyone rich! You need to invest in markets. The more time you wait in the market, the more you can earn!

Some advisors may tell you: Don’t bother about anything, invest and wait for 20 years and you will automatically make money! Sad Advice! I agree you will make money, but you will lose on many opportunities! With time the investment methods also change. Warren Buffet style cannot be blindly followed in 2018. Those Buy and Hold advisors preach this to reduce there own workload. I find no other reasons for such advice.

Indian Stock Markets would do well, it seems almost clear that RBI would not increase interest rates at least in next two meetings. Crude has come down steeply. Inflation is under control. Future of markets at least in India seems great. Be part of it or lose yourself in deposits! The choice is yours.

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Happy Investing

Vivek Karwa

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