As an Investor what should be your response during the Equity Market turbulent times?
Dear Investors,
As we all know that in recent times the equity market is highly volatile, and it is in a consolidation phase for the last 18 months (approx.) since Oct ’21. Investors who have travelled with us for the last 10-15 years in the Capital Market, volatility or consolidation is not new to them and they have become wiser enough to manage their emotions during times of turbulence and headwinds. But we understand that the investors who have started investing in mutual funds for the last 18 months – 24 months have never experienced these kinds of volatility and they are little nervous and anxious by seeing the market volatility. We need to understand that the consolidation or volatility is not meant for the Equity market alone, it happens in Gold, Real-Estate and in all the asset classes. Gold has not performed from 2013 – 19 (almost 6 yrs) and Real estate is underperforming since 2014 (almost 9 yrs), since we are holding the above asset classes for the longer term, despite the volatility we are reaping decent returns from the above asset classes, the same thing is applicable for Equity asset classes as well, if you hold it for a long time we will be able to reap out much superior returns than the above asset classes.
To quote a few scenarios in the recent past, Equity Market went into the consolidation phase from 2010-2013 and the market has given only 4-5% returns in those 3 yrs, after the outbreak of the consolidation phase, market has given 50% returns in the next 2 yrs (between 2014-15). If you average out, an investment return from 2010 to 2015 (years), it has approximately provided 15%+ returns – much superior returns than most of the other investment assets.
Similarly during Covid time from March 2020 – Sep 2020, the nifty went from 12500 to 7500 pts, a correction of close to 40%, and from there in the next 1-year market has given 100 % return, nifty rose from 7500 pts to 18500 pts (Oct’21). We have informed most of the investors to invest heavily during the consolidation phase (2010 -13) and correction phases (2020) but only few have utilized the opportunities and now they are sitting at heavy profits.
We have seen many times, when we interact with investors, they say that they want to invest during the market correction and when the correction happens, they are not ready to invest (mostly due to fear of further market fall) and then they will regret for non-utilization of the opportunity in the later stage. We are in a similar situation now, and this is not the time to be in fear, rather this is the time to go aggressively but you have to invest in a staggered manner either through SIP or STP mode.
What investors need to do during these times?
- Please continue your SIP and if possible, increase your SIP contribution to enjoy buying at lower levels and get higher returns.
- Market is now available in a discounted price, time to utilize the current market situation and average your portfolio.
- Please don’t check your portfolio frequently, check it out 3 months once to avoid excitement and disappointments. We are here to follow the market closely and advise you if you have to react.
- Being a long-term investor, we shouldn’t be worried about the short-term volatility of the market, we should rather see it as an opportunity to invest.
- Inaction leads to wealth creation, so have to manage our emotions and remain calm during these turbulent times.
- Equity instruments are meant for long-term investors, those who can stay 5-10 yrs period. So please stay for the full course and enjoy the returns.
- Treat the volatility as your best friend and maximize your returns.
There are around 700 crore population and 200 countries in the world, one after the other, some kind of events will keep creeping up. We have seen many things in the past and many more to come in the future as well. The market will react to all those events and will certainly bounce back stronger and surpass the previous high after some time. As far as Equity market is concerned Correction is temporary and Growth is permanent. Equity Market and volatility are common for every investor, it is not because of the market volatility investors are not making wealth, but it is purely because of the investor’s behaviour towards the volatility they are not making wealth.
We, from Future Wealth Investments, are here to ensure that we provide proper assistance to your investment strategy. Though it is quite difficult to time the market to perfection i.e., buy at the lowest and sell at the highest levels, we use all our experience and strategic connections within the investment industry to ensure that we provide proper advice/assistance to all our customers during volatility.
India is expected to grow in the medium to long term and all these investments will grow sharply giving better returns than any other investment assets. Be resilient about India’s growth story and stay invested confidently.
Happy investing…
Thank you,
Future Wealth Investment team.
