Best time to buy shares

The market has been falling for the last few days, so do I buy shares now or wait for the market to fall? Serious money can be made if we buy when the markets are done. Take any example from history. But to make that type of money, you need to change your perspective from short term to long term, but the best thing to do would be to start with SIP and keep putting in small amounts on the day the market falls. This would be a rewarding strategy, if you have a goal which is minimum 3 to 5 years away. You can start becoming happy, when the markets go up. Remember investing in a rising market can make you happy in the short run, but investing in a falling market could make you wealthy in the long run.

If you have seen history, a falling market lasts for about a year and then there would be a listless market for around 5 years. But after that the markets just rise and that is the reason, I said, invest in a falling market and you could make money in the long run. So do not stop your SIP’s when the market is down, buy stocks instead of playing in derivatives, buy stocks after research only and buy from different sectors. Keep some money aside in liquid funds, so that if the market takes time to recover, you do not dip into the investment, instead, you could use the money from the liquid fund. Even if you do not need money for emergencies, it is better to keep it aside. After 5 years if you see the market still down, you could use this money to buy more shares.

Saying all the above investment horizon is the key, you need to look at a minimum period of 5 years from the time the markets start falling. But if you are looking at a period of less than that, do not go for shares.

Becoming rich by buying right and sitting tight

We keep hearing that if you want to make good money equity is the best. You would have heard many stories of people becoming rich by buying a stock and sitting over it. This sounds too good to be true, because whenever you have invested you have lost money. Does this sound familiar? These days you would have heard, when the market is down buy and when it is up sell, but how do we know if the market is a falling market or a rising market. This is difficult to tell. It is not easy to time the market, you just need to be lucky to have brought a stock at its lowest value. There would be numerous instances of the stock falling soon after you purchased it, the only reason is nobody knows when a stock or market would stop falling.

You just cannot become rich without taking risks. Equity investing is risk taking and you need to have a risk taking appetite, but not all of us want to take risks. Most of the people I talk to say, I do not have money to invest, but at the same time ask for tips. All want to make it rich soon, not ready to put in efforts or understand the risks. The first thing you need to do is think long term. Next treat the investment like your child, keep track of it, and if you find something is going wrong, take corrective action. Now when your child makes a mistake, you first analyse if it was really a mistake and only then take corrective action, same way, find out if what is happening is natural or the management is not taking corrective action and then decide. Do not regret if you made an error of judgement, this happens to all of us. Next check if the company you are investing has been creating value over a long time and is capable of creating value over the next 3 to 5 years. If it is a new company, would it be creating value over the next 3 to 5 years? Because markets change daily, our lives are also changing daily.

Do not go for IPO’s as they give you a very short term view as their intention is to get the IPO through, take a long term view. Understand that what is good today may not be good tomorrow, so try and take a long term view of any investment. Last whole market keeps following the index, which is a good indicator, you also should track, but track which stocks are part of it and which are not. Remember the index stocks are ever changing and usually only the good stocks remain in the index, so if a particular stock you are holding is removed from the index, it is time you too exited from it. If you do not have the ability or time to do all the above, go for the next best option i.e. invest in Mutual Funds, the fund managers are trained to do all the above and that is their full time job. Here you can just buy the units and sit tight.

Best Mutual Funds to Invest

The market has started to move up and now everyone is thinking of investments. IMD has predicted good monsoons and government has presented some good numbers. We want to invest but at the same time do not want to take too much risk, so most people tell invest in mutual funds. But which mutual fund scheme should I invest in? When the markets are up all the funds show good growth but the best way to check is how the fund did perform when the markets were down. Now many fund houses will give you this information directly. You will have to do your own research, last year was a good example. Check the fund’s performance for the last one year. This will help you narrow down on the schemes you would like to look at. Once you have done that, check the long term returns of these funds. If you find they have done well on both these parameters. You would have been able to narrow down to a funds in single digits. Now this strategy is good if you are a long term investor. So what are you waiting for, do your reading and research and start investing.