I recently read an article in a magazine saying that equity investments are easy to handle. It said you should invest in equities – and sell when you reach your level of expected return, then wait for the next bear market. I think it is an amazing idea, but misses the point completely.
Let us say you invested when the index was 21000 and you expected 20% p.a. return. Then the market tanked to 8000, and so did your portfolio – now what do you do? The author says just wait – till you get your 20% return i.e. till the index reaches 25000 and then sell. However it may take say 5 years to reach there – and your returns would be nowhere near your targetted return.
So what do you do? I do not know the answer. The author has not said what to do.
Let us say you invested when the index was 18000 then it went to 21000 – and you had got your 20% return – would you have really sold now or watched some expert on tv say ‘market will go to 25000’ and therefore you stayed on. On the way back you see 21k, 18, 14k, …etc.
Or take a case of being brilliant and bought in when the index was 3000. You then sold at 3600 – hey YOU GOT YOUR 20% – right? Then watched the market go up to 4k, 8k, 12k, 21k…..lol
So what do you do? I do not know the answer.
Frankly such articles are like porn – just to excite you. They means NOTHING. Completely useless and sounding brilliant THANKS TO HINDSIGHT.
You are 24 years of age and you have started a SIP – and at your age of 27 the market is in a raging bull market.
So what do you do? I do not know the answer. And if it were in a big Bear market from your age of 27 to your age of 32….
What do you do? I do not have the answer….
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