BackWith markets at an all-time high, should you wait before investing in stocks?
Doing regular monthly investments and following in a staggered manner to invest in the stock market can help you build a long-term portfolio
PremiumNEW DELHI : I am 22 and starting my investment journey. My goal is to save as much as possible in the next seven to eight years before big expenses start. I am planning to invest around ₹40,000 per month from my salary and increase it in subsequent years. But as the markets are at an all-time high, should I wait for a year or two to invest directly in stocks?
—Aman Garg
Congratulations on starting your investment journey, the earlier you start investing, the more it works in your favour. Your thoughts on making the most of your savings in the coming years are very encouraging. A monthly investment of ₹40,000 with annual increase of 5% can help you build a corpus of ₹67 lakh at the age of 30, if we assume 10% return per annum. This accumulated amount can prove very useful for different objectives at that age or you may continue to focus on wealth creation in future as well.
While the stock market is at an all-time high, doing regular monthly investments and following in a staggered manner to invest in the stock market can help you build a long-term portfolio. This systematic investment approach will help you average out the investment cost across market cycles and this strategy always works in the interest of investors. At the same time, you also develop a disciplined approach towards investing when you follow a systematic investment strategy. Hence, you need not bother much about the stock market being at an all-time high to start with your investment. You can invest in direct equities, but investing through mutual funds may work better for you as these funds are managed by professional fund managers and it also offers diversification across companies and sectors. You can consider setting up Systematic Investment Plans (SIPs) in the following equity diversified funds to begin with:
Nifty Index Fund (20%)
Parag Parikh Flexicap Fund (18%)
UTI Flexicap Fund (18%)
Mirae Asset Large Cap Fund (18%)
Canara Robeco Emerging Equities Fund (16%)
DSP Mid Cap / Axis Mid Cap (10%)
Harshad Chetanwala, is founder MyWealthGrowth.com. For queries and comments, please mail mintmoney@livemint.com
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