Womoneya

As the markets are reaching new heights every day, the most common we get asked are;

The market is so high, should we wait? Should we continue to invest?

The market has fallen now, should I invest or wait for it to fall further?

I want to counter question you, if you don’t want to invest now, what will you do with the money? Put it in the FD, savings account, liquid fund?  Where will you park the money till the ‘fall’ and for how long? Do know when it will fall? How much it will fall? Since you don’t know the answer to these questions, you will most likely spend it or keep waiting.

We understand that every investor wants to get the best returns from their investments. So they keep asking these questions.

Firstly, you need to understand that if you are investing in equity markets, you are in it for the long haul, minimum 3- 5 years. Somedays the markets will be high, somedays the market will be low. If you invest consistently, what you get is an average of the returns of that period. Unlike the common perception, average is not bad, especially when we look at equity returns.  For e.g. When we examine the data from 1991 to March 2024, out of a total of 33 years and 3 months, the market reached an “All-Time High” 22 times. Take the data of 43 years of the stock market in India. There have been approximately 11000 trading days, Positive and negative returns were observed as follows:

Daily: 53% positive, 47% negative

Weekly: 56% positive, 44% negative

Monthly: 61% positive, 39% negative

Quarterly: 64% positive, 36% negative

Yearly: 72% positive, 28% negative

Even market experts cannot possibly catch all the highs and all the lows!  So the next best option for investors is to try to catch the average. How can we do that? By continued investing, and whenever possible increase your contributions during the low periods. Just so that you understand –

Understanding Markets – NIFTY 50
How NIFTY performed between April-1991 and April 2024
Year Start	NIFTY 50	Rolling 1 Year	Rolling 3 Year	Rolling 5 Year	Rolling 10 Year	Rolling 15 Year	Rolling 20 Year	Rolling 25 Year
		CAGR (%)	CAGR (%)	CAGR (%)	CAGR (%)	CAGR (%)	CAGR (%)	CAGR (%)
Probability of gain		21/33	25/31	25/29	23/24	19/19	14/14	9/9
Average		21.01%	12.22%	10.97%	11.18%	12.07%	11.92%	11.02%
Maximum		242.24%	52.24%	36.94%	19.20%	16.88%	15.44%	12.98%
Minimum		-47.37%	-13.76%	-5.33%	-1.13%	6.55%	7.40%	8.24%

The above table shows the NIFTY 50 performance, now what your average depends on how consistent you were with your investments, how much were able to add incrementally during the low period and how long you stayed invested in the fund.

Tennis GOAT Roger Federer in his recent speech said that he won 80% of his matches but only 54% of the points in those matches!

You don’t need to win all the points. You just need to take advantage of the low periods, let compounding through consistency work and be resilient.