Finlabs India

The Markets Are At A Life Time High. What Should You Do?

“Equity is the best form of investment,” “This is the start of the biggest market rally yet,” and “The Sensex will cross 50,000 by the year-end.”.

“The markets have heated up and may see a major correction”; “The PE of the market is very high. Brace yourself for a fall.”

Yes. These days, you would definitely be reading both the spectrum of headlines in the news across the TV and the print medium. So the golden question still is, “As an investor, what should I do?” If you ask me, if you have a plan in place, you should continue with it and not react to market movements.

What do we mean by this? Should we not listen to the market experts and plan our next move? If the markets will still continue their upward journey, should we not invest more? If the market is overheated, according to some experts, should we not redeem and/or stop our systematic investments? The plain, simple, yet boring answer is no.

Let us explore this further. If you happen to read golden words from legendary investors who have made money, they will talk about the following principals:.

  1. Start as early as possible, as this would give more time for your money to grow. If you have not already started, start investing. Better late than never
  2. Invest on a regular basis with the utmost discipline. The best way to be disciplined is to automate the monthly investment through SIP. More on this is ahead in the article.
  3. Invest for the long term. Having a long-term view helps you ride through the volatility and market ups and downs and not take ad-hoc decisions.

Let us take the above three basic principles a little further.

It is always better to have a plan prepared so that you can manage your finances. Someone has rightly said that “failing to plan is planning to fail.” A plan helps you take into consideration multiple factors in one place, which is very necessary. E.g., if I invest my savings in equity without knowing that I will require it for the down payment of the house 1.5 years down the line, it would be considered not ideal for the duration available.

A financial plan ensures that you do not look at taking investment decisions in isolation or buying blindly because someone else is doing it. Following are some of the significant features of the plan that will ensure that you need not be worried about market volatility.

  • Risk Profiling: Each one of us has a risk-taking appetite that will be very different from others.
  • Asset Allocation: Based on the risk profile, a suitable asset allocation comprising a bucket of products is designed.
  • Goal Planning: As we saw above, the investments need to be done based on the objective for which we will need them and when we will need them.
  • A plan also ensures that protection measures in the form of an emergency fund, Mediclaim, term cover, personal accident, etc. are taken by the investor.
  • The biggest advantage of a plan is that it forces you to be disciplined. It will help you to regularly monitor and make changes in the nick of time.
  • Regular investments help you to buy even when the market is down and help you to take advantage of averaging out your cost of investments over a period of time.

In conclusion, a financial roadmap ensures that you make the right investment choices and reach your desired objectives without worrying daily about market movements.

Scroll to Top