Authored by: Ajit Panicker
The markets globally have been uncertain from past 4-5 years, coupled with the recession globally. Then countries like US, UK, and many european countries being effected due to sub prime crisis and the recessionary forces. The growth rate was really under the negative quadrant for too long. The political upheavals alongwith economic downturn in middleeast, israel had all contributed to a large extent to make investors largely the retail investors make opinion that in this uncertain market conditions, the equity market should be kept away with. if required one should largely invest in debt market and hence the debt market has been very promising in past 2 years, atleast in india and the subcontinent.
But out of all the investment tools , i feel if one is ready to invest a good amount and want to keep it decently long term for atleast 7 years , EQUITY is the best option. Daily traders would not gain substantially from EQUITY, it is just that they are earning their daily bread and some small gains. But there is an equal chance of all the gains garnered in the past weeks by a washout when the market falls and situation is bearish.
"Siegel is a professor of finance at the Wharton School of the University of Pennsylvania argues that given a sufficiently long period of time, stocks are less risky than bonds, where risk is defined as the standard deviation of annual return. During 1802–2001, the worst 1-year returns for stocks and bonds were -38.6% and -21.9% respectively. However for a holding period of 10-years, the worst performance for stocks and bonds were -4.1% and -5.4%; and for a holding period of 20 years, stocks have always been profitable."
The above situation is obviously being taken in US, but the STOCKS as an option of investment instrument behaves almost alike in all countries across the globe, differing minutely due to political and economic heat or coldness in the country, which is locally dependent.
What i am putting forward as a financial planner is, that there is no time to enter any kind of market, all situations are to be invested or to come out. No one has ever managed to time the market. But yes the decisions to exit or enter has to be judiciously taken alongwith the equity or for that that matter the financial expert.
India's growth in next 20 years lies in investing in equity for long term minimum 7 years and there is no maximum tenure. Equity does not offer you any lock in period, but this lock in period has to be disciplined by your self.
The returns of the equity in indian market
1. Top Diversified equity mutual funds have given compounded annual return of more than 35% per annum for the last 10 years.
2. The annual growth rate of reputed Indian companies is 20-30% p.a.
3. Diversified Equity Mutual funds invest their money in Indian and multinational companies engaged in manufacturing and services industries. The demand for their products will go on increasing every year because of increase in population and increase in purchasing power in India. The value of their shares will go up when companies make more money, In turn the value of investment made by the mutual funds in these companies will also go up. Hence the investor who has invested in these mutual fund would get handsome returns.
4. Your money will be invested by the mutual funds in number of reputed Indian and multinational companies engaged in different industries, hence your risk is reduced as you “do not put all your eggs in one basket”
5. Indian economy is on the growth path according to Indian and international economists
6. Your investment will be handled by highly experienced and qualified mutual fund managers who have excellent track record
Therefore do not turn your back completely from the share market, and invest in equities wisely under the guidance of financial experts and financial planners.
The markets globally have been uncertain from past 4-5 years, coupled with the recession globally. Then countries like US, UK, and many european countries being effected due to sub prime crisis and the recessionary forces. The growth rate was really under the negative quadrant for too long. The political upheavals alongwith economic downturn in middleeast, israel had all contributed to a large extent to make investors largely the retail investors make opinion that in this uncertain market conditions, the equity market should be kept away with. if required one should largely invest in debt market and hence the debt market has been very promising in past 2 years, atleast in india and the subcontinent.
But out of all the investment tools , i feel if one is ready to invest a good amount and want to keep it decently long term for atleast 7 years , EQUITY is the best option. Daily traders would not gain substantially from EQUITY, it is just that they are earning their daily bread and some small gains. But there is an equal chance of all the gains garnered in the past weeks by a washout when the market falls and situation is bearish.
"Siegel is a professor of finance at the Wharton School of the University of Pennsylvania argues that given a sufficiently long period of time, stocks are less risky than bonds, where risk is defined as the standard deviation of annual return. During 1802–2001, the worst 1-year returns for stocks and bonds were -38.6% and -21.9% respectively. However for a holding period of 10-years, the worst performance for stocks and bonds were -4.1% and -5.4%; and for a holding period of 20 years, stocks have always been profitable."
The above situation is obviously being taken in US, but the STOCKS as an option of investment instrument behaves almost alike in all countries across the globe, differing minutely due to political and economic heat or coldness in the country, which is locally dependent.
What i am putting forward as a financial planner is, that there is no time to enter any kind of market, all situations are to be invested or to come out. No one has ever managed to time the market. But yes the decisions to exit or enter has to be judiciously taken alongwith the equity or for that that matter the financial expert.
India's growth in next 20 years lies in investing in equity for long term minimum 7 years and there is no maximum tenure. Equity does not offer you any lock in period, but this lock in period has to be disciplined by your self.
The returns of the equity in indian market
1. Top Diversified equity mutual funds have given compounded annual return of more than 35% per annum for the last 10 years.
2. The annual growth rate of reputed Indian companies is 20-30% p.a.
3. Diversified Equity Mutual funds invest their money in Indian and multinational companies engaged in manufacturing and services industries. The demand for their products will go on increasing every year because of increase in population and increase in purchasing power in India. The value of their shares will go up when companies make more money, In turn the value of investment made by the mutual funds in these companies will also go up. Hence the investor who has invested in these mutual fund would get handsome returns.
4. Your money will be invested by the mutual funds in number of reputed Indian and multinational companies engaged in different industries, hence your risk is reduced as you “do not put all your eggs in one basket”
5. Indian economy is on the growth path according to Indian and international economists
6. Your investment will be handled by highly experienced and qualified mutual fund managers who have excellent track record
Therefore do not turn your back completely from the share market, and invest in equities wisely under the guidance of financial experts and financial planners.
No comments:
Post a Comment