Is the timing right for Investment?

In the global markets, Gold had fallen some time back and it has now started to pick up again. Why is this happening? The only reason is uncertainty. As you must have seen, whenever there is uncertainty in the market, gold rises, this is the time to make money by selling gold. Worldwide all commodity prices are falling, we all want to know reasons, can’t you see, sales are not picking up, hence the prices are falling. All assets follow a cycle of 30 years, 10 years rise and 20 years fall. So are we in a rising or falling cycle for gold? You take a guess, gold prices just kept going up from 2002 to 2012 and then started falling, and so do you think history will repeat itself? Only time will tell. As regards equity market the cycle is for 7 to 9 years, 4 to 5 years of rise and 3 to 4 years of fall, looking at history where are we?

Real Estate also goes through cycles which is around 20 years i.e.10 years of rise followed by 10 years of stagnancy. Real Estate kept going up from 2004 to 2013, so now what? If you look at all the markets they are all supposed to be in fall mode and hence the uncertainty. Add to this interest rates are going to soften. So in such situation only thing that will go up would be rents, as people will not buy waiting for real estate prices to correct and interest rates to fall. But then you do not want to invest in real estate, so those who have already invested are bound to benefit during this time. So what should one do in such a situation? Depending on your investment horizon you can plan your investments. For short term go for Debt funds again here your choice of Liquid, short term and long term debt will depend on the period you are ready to wait. For medium term go for balanced funds and long term would definitely and always be Equity and that too using the SIP mode. For detailed investment plan or advice please contact your financial advisor.

Direct Investment in Equity Shares

During the last two years many persons told me that they made good returns by investing directly in Equity shares, so this year I asked the same persons what happened last year and they said, there was no loss. Yesterday I asked the same persons and they just told me they were busy. Nobody was ready to talk about the stock market, the reason is the external factors have hit the stock market. Nothing is actually wrong with the stock market, but then we have so much information available that we tend to take very short term view for an asset class which should be looked at from the long term. This is the reason I suggest that even if we want to move into equity, we should go the mutual fund route. If you find it difficult to believe, try this. The amount of money you are ready to put aside for equities, put half of it in a good large cap mutual fund and you play with the other half and let us compare the amount of money you have made after three years.

The chances are that you would have made more money in the mutual funds route after removing all the costs involved with absolutely no headaches. You concentrate at what you are good at and leave market investment to professionals, you will end up making more money. But if you try to concentrate on making money in something which is not your core competency, you will end up losing time and money till you become good at it. That is the reason, businesses employ professionals for every department. So why don’t you behave like a businessman and employ a professional, i.e. a good financial advisor who will suggest how you go about with your investments.  A good financial advisor understands risks and returns and also understands when to exit.

When you try to do it yourself, you have to do all the analysis yourself, which will take time. This is the reason a good businessman concentrates on what he is good at and pays a professional to do a job for what he is good at. One o the basics on equity investing is diversification, you could do the diversification yourself, but then the amount of time you need to study all the sectors will take time, instead a mutual fund will do it for you at fraction of the cost. When you do your investments through a mutual fund you manage to beat the market returns and if you really want to get the best ask your financial advisor to choose the right fund for you.