One can easily sense a lot of despair and gloom in the equity investments these days. There are many speculations around the following concerns –
- Why Equity Investments are not giving any due results in the current scenario?
- Do you think we should discontinue our SIP or change our SIP from equity to debt fund?
- Our economy is witnessing a slowdown and the government doesn’t seem to be doing enough?
When will equity investments revive?
These are the conversations that I am having thrice a day with investors these days and people are calling/ visiting us to check what should they do. But here’s what I want to bring to your notice and why we should not be way too much worried-:
2008-09 saw one of the world’s worst economic crisis since 1929
When I look back, it was all bleak. Even the banks did not lend to each other and literally, everything came to a standstill. But today after 10 years, we see that time as the best time to invest. Even those who had invested saw their money not only recovering from temporary book losses but give tremendous gains. At some point in future, people will realize that 2019 offered them one of the best times for investments.
India is a $3Trillion economy & constantly growing
No one can say for sure when India will be a $5 trillion economy; from today’s $3 trillion, leap to $10 trillion! As things improve, the benefit of the economic growth will be reaped by those who hold their equity investments with patience and stick to their investment commitments.
Wealth Accumulation has never been easy and will not be
Wealth accumulation demands patience and persistence along with getting used to such uncertainties. The tendency to think short term and not be able to take a view of the economy over 10 years horizon is the primary reason why people are not able to gain from their investments. It has not helped those who pulled out the money in 2008 in haste and will not help those who will do so today.
Real Estate is in distress too
We all know how bad real estate is today and most of the investor moolah is locked in that. Even the next 5 years look gloomy but there’s no hurry to sell and instead, people are waiting to see it bloom again. When there’s hope for real estate revival then why are we perceiving risk for equities which have not even shown a persistent decline?
Bust the Myths
When people look at returns for mutual funds they often assume that markets give 12% return every year that is
(12%+12%+12%+12%+12%+12%+12%…)
However, markets give more than 12% except the returns come like this (6%+17%+26%-13%+2%-4%+34%…)
That why we call it as CAGR (Compounded Annual Growth Rate) of 12 % and not year on year.
The ‘market’ is a veteran. It has seen panic, anxiety and qualms and yet offered safety and opportunity for investments that have shown long term trust. Investors should not dread a bad season but see it as an opportunity that will bear fruits in a few years. I know times are tough and it might get tougher but the best thing you can do is “stay inactive during such times” and remind yourself what you said in the first place when you started investing ”I want to invest for long term”.
