Home / Opinion / So you think you missed the market rally. Again.

Is this a good time to invest? If I’d got a lakh each time I was asked this question, I’d buy a Greek island. Actually, not Greece, I’d rather be home. I’d have bought an…ok, I actually don’t want to buy any property. So, let’s just leave it at this—I’d be darn rich. But I’m digressing. Let’s get back to all-time-highs of the market and good time to invest questions. You could not have missed the all-time-high stories last week, and depending on your investment proclivity, you’d fall into one of two groups of people. The relatively larger group that shook its head and said: we missed it again and now it is too high to get in. The smaller group that let out a sigh of relief after almost five years of flat returns to look at an average annual return of anything between 12% and 25%. (If your funds show lower than that—do check your selection of funds.)

So, is it too late to invest? The short answer is: no. Your fear is that the moment you invest, the markets will tank and you’d sit on a huge loss. You believe that you are alone in being the unluckiest investor in the world. The market waits like a demon for you to invest and then burps away the money—eating it all up. So, let’s imagine that you are indeed the unluckiest investor in the world and the market tanks every time you invest. My colleague Kayezad E. Adajania crunched some numbers on market returns and found that, irrespective of when you bought, if you just held the Sensex for seven years, you would not have lost any money. Read the story (http://goo.gl/CmLxwG) to see the numbers across time. This question has fascinated me and I’ve done this exercise myself several times—when markets are low, when they are high—over the past 10 years. At the worst point of the markets, the holding period rose to 14 years— if you were the unluckiest investor in history and invested on the worst day ever and you were in the middle of a bear market, you would still make no loss if you held for 14 years.

Real life is not like this. We don’t have such large lump sums to invest—most of us live on our salaries; at best, we have a monthly surplus that we need to invest. This can be anything—from as little as 1,000 a month to several lakhs—depending on your salary and expenses. Investing each month irons out the spikes and the troughs of the market. You have to stop looking at equity investing as a one-time punt, the one big, all-or-nothing move that will make you rich. You think equity investing as a 5-metre dive into the deep, while what you really need to do is to learn to float. It is not a one-time gourmet meal, but the regular daal-chawal that you eat at home. Your biggest challenge is not to decide when you want to enter the market, but to get the car ready for a long ride. Most intentions to invest in equity-linked products fail because we are not prepared for a regular investing method. Understand this: if you clear the clutter of investing in funds, you will slowly fall into the habit of investing each month. And you won’t ever ask the “good time to invest" question again!

So, what does it take to clear the clutter? You need to do your know-your-customer verification. You need to link your bank account to an online broker or portal or go directly to the mutual fund to invest. My suggestion: go with an online broker or portal rather than directly to each fund house. You can migrate to direct investing once you have a well-oiled investing strategy, but to begin with, stay with a vendor who makes it easy to enter or exit. Did you know that there are portals that allow you to start a systematic investment plan (SIP) with a maximum and minimum amount defined? In the month you have less money, you can reduce your SIP, or hike it in the month when there is more money. A bad money month allows you to pause the SIP. Use this market rally that’s got your attention to clear the decks for sustained regular investing. The India growth story has a lot more steam ahead—don’t look at the market high and get discouraged. If you can’t decide on which fund to pick, use Mint50 (http://goo.gl/lMz2Du ) to choose from. If you don’t want even this choice, just buy the Sensex or the Nifty through an exchange-traded fund or index fund. Don’t miss the bus this time. There is a long ride left.

Monika Halan works in the area of financial literacy and financial intermediation policy and is a certified financial planner. She is editor, Mint Money, Yale World Fellow 2011 and on the board of FPSB India. She can be reached at expenseaccount@livemint.com

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