The kind of things people say sometimes! Listen to this one mentioned in the news a couple of days ago - 'If the market falls 20% more, sell your house and buy equity,' Nilesh Shah, MD Kotak MF.
I understand that the gentleman must have meant that with a further fall of 20%, the Indian stock market would be a lucrative buy, as against real estate or any other investments. But in the stock market world, it is always better to be clear. For many fortunes have been made and lost here in an attempt to reach into the heart of this seductive temptress.
Personally, I am in no position to give advice on the stock market. I have not really followed or kept track of it. Once when tempted into it, have managed to lose a few thousands here and there - thousands which would not have been lost, had I not developed cold feet a few months into the investment. A fair few times, I have also made money, when I have invested wisely - through mutual funds. But again, I could have made more money if I had waited for the right time.
All I can share is my personal experience for those who really want to invest. My experience says that, unless you are following the stock market very carefully and religiously, it is better not to buy shares blindly based on market gossip or tips from your brokers or friends / families - however reliable it seems. If you must; invest in A group shares with reputed company names (read here about classification of shares). But better still, do not put your own head into deciding what to buy. Let better heads decide - i.e. invest through mutual funds.
There are rating agencies, brokerage houses online - all give you good information on which funds are doing well over a 5 year or other reasonable period and which are not. Additionally, equity mutual funds enjoy good tax benefits in our country - equivalent to the purchase of equity shares - no taxes if you hold for a minimum of 1 year. Also, you can invest small amounts regularly - through Systematic Investment Plans or SIPs. Small amounts like Rs. 500/ Rs.1000 per month can be invested. Unlike in case of shares, where you have to buy according to the market value. A big plus these days is that mutual fund investment can be easily done online now and direct investors do not attract brokerage charges or annual fees.
Second thing is, to know that for really good returns, you have to consider holding onto your investments for at least 5 good years (provided that you have invested wisely - through good mutual funds or directly in good A group shares that you have researched on). Once you have invested wisely, sit back and don't look at your investments frequently - forget it for a couple of years at least. Okay, you may keep a track of your investments if you can't forget about it. But remember that market fluctuations are cyclical - so don't jump to buy as soon as the stock market falls and don't rush to sell as soon as the market picks up. The vice versa is also true. Stock market investments are not for the faint-hearted. One who wants to win, has to have the patience to wait for the right time.
Third thing is - how do you know when the time is right? For starting with your investment in baby steps through mutual funds - almost any time is right. For directly buying shares, you will need to do some research. But if you wish to buy good quality shares that you know have great potential, again any time is right. The perfect timing is a matter of concern for regular / daily traders and brokers, who invest in all and any kind of shares - depending upon market news, day to day changes. For us common folk, being a long term steady investor makes more sense. It gives you more peace of mind too. And good time to sell? Well, after you have been invested for at least 3-5 years and have accumulated a good base, sell whenever you need the money. Don't go by greed, just by your need.
I know what I have mentioned above is not much. I have only stated what everybody intuitively knows about the stock market. But there are fears and stigmas attached to investing in stock markets - I would suggest that today investors be brave enough to invest in the markets, but through mutual funds. The amount of knowledge and information available through the internet today for investors is pretty good. One can use it to good advantage and also play a role in helping our economy.
I understand that the gentleman must have meant that with a further fall of 20%, the Indian stock market would be a lucrative buy, as against real estate or any other investments. But in the stock market world, it is always better to be clear. For many fortunes have been made and lost here in an attempt to reach into the heart of this seductive temptress.
Personally, I am in no position to give advice on the stock market. I have not really followed or kept track of it. Once when tempted into it, have managed to lose a few thousands here and there - thousands which would not have been lost, had I not developed cold feet a few months into the investment. A fair few times, I have also made money, when I have invested wisely - through mutual funds. But again, I could have made more money if I had waited for the right time.
All I can share is my personal experience for those who really want to invest. My experience says that, unless you are following the stock market very carefully and religiously, it is better not to buy shares blindly based on market gossip or tips from your brokers or friends / families - however reliable it seems. If you must; invest in A group shares with reputed company names (read here about classification of shares). But better still, do not put your own head into deciding what to buy. Let better heads decide - i.e. invest through mutual funds.
There are rating agencies, brokerage houses online - all give you good information on which funds are doing well over a 5 year or other reasonable period and which are not. Additionally, equity mutual funds enjoy good tax benefits in our country - equivalent to the purchase of equity shares - no taxes if you hold for a minimum of 1 year. Also, you can invest small amounts regularly - through Systematic Investment Plans or SIPs. Small amounts like Rs. 500/ Rs.1000 per month can be invested. Unlike in case of shares, where you have to buy according to the market value. A big plus these days is that mutual fund investment can be easily done online now and direct investors do not attract brokerage charges or annual fees.
Second thing is, to know that for really good returns, you have to consider holding onto your investments for at least 5 good years (provided that you have invested wisely - through good mutual funds or directly in good A group shares that you have researched on). Once you have invested wisely, sit back and don't look at your investments frequently - forget it for a couple of years at least. Okay, you may keep a track of your investments if you can't forget about it. But remember that market fluctuations are cyclical - so don't jump to buy as soon as the stock market falls and don't rush to sell as soon as the market picks up. The vice versa is also true. Stock market investments are not for the faint-hearted. One who wants to win, has to have the patience to wait for the right time.
Third thing is - how do you know when the time is right? For starting with your investment in baby steps through mutual funds - almost any time is right. For directly buying shares, you will need to do some research. But if you wish to buy good quality shares that you know have great potential, again any time is right. The perfect timing is a matter of concern for regular / daily traders and brokers, who invest in all and any kind of shares - depending upon market news, day to day changes. For us common folk, being a long term steady investor makes more sense. It gives you more peace of mind too. And good time to sell? Well, after you have been invested for at least 3-5 years and have accumulated a good base, sell whenever you need the money. Don't go by greed, just by your need.
I know what I have mentioned above is not much. I have only stated what everybody intuitively knows about the stock market. But there are fears and stigmas attached to investing in stock markets - I would suggest that today investors be brave enough to invest in the markets, but through mutual funds. The amount of knowledge and information available through the internet today for investors is pretty good. One can use it to good advantage and also play a role in helping our economy.
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