The Equity Markets, since the past few weeks, it seems has already discounted the news and the way the stock market has rallied, rather still rallying substantially as I write this.
Talking about Equities, after the huge crash in 2008-09, wherein the investors lost millions of Rupees, people are having a sign of relief that this government will definitely take India to the next level, which can be also seen by FII numbers wherein they are pouring millions of dollars into Indian Equities.
Where the Stock market is headed in the short run or in the long run, nobody has a concrete answer, but yes, as an Intelligent Investor one must take care of the following things if a person is thinking to invest in to Equities or if he/ she is already invested.
- Never Try to Time the Market: People get tired hearing the same old thing that “One Should Never try to Time the Market”, but this statement is as basic as the needs of an Individual, i.e. “Food Clothing & Shelter”.
- Nothing is Risk Free: We all know in our Life “ No Pains, No gains”, similarly when it comes to investing we should remember that “No Risks, No Returns”. Well, to extend this further, we need to take adequate risk in line with our risk appetite and time horizon of the goal. So do check out Large Cap funds if you have largely invested in FD so far. Progressively, you can even look at Mid & Small Cap Funds as a part of your portfolio.
- Invest in equities for Long Term: Short Term & Long Term differs from person to person, but as I write this, particularly for Equities, long term stands for anything more than five years. In the short term you might come across many people who would say that they have doubled their money in 8-10 months, but friends please be aware there is always a flip side to everything & the grass is always green on the other side. Hope you get it.
- Diversify: We all know that “ Never put all your Eggs in one basket”, but still somewhere down the line we tend to commit certain mistakes while investing in Equities. If we feel that a particular stock or a sector is very lucrative, we tend to invest heavily into it , as a result we may have to face adverse situations. Never, ever do the mistake of investing heavily in one particular stock or a sector. Also, one should not invest entire portion into “Equities”, there are other asset classes like “Real Estate”, “Gold”, or “Debt” which should also be considered.
- Take Advice or Do Proper Research: Never hesitate to have a second opinion, or if possible do hire the services of a professional, who can guide you in the right direction. Yes, you also need to check the credentials of the person, you taking advice from. You can either cross check through his academic qualifications or through his existing clientele.
Well, Last but not the least, always remember that “ Past Performance may or may not be guaranteed in future” & “Equity investments are subject to market risks”.
What’s been your experience? Are you enjoying the current rally or missed the bus? Look forward to your comments.
Happy Investing !