Subra with so much of volatility, is it worthwhile being in equities? You remember the Rs. 3 lakhs that I put in a fund about 4 years ago is up only about 12% – should I sell it and put it in National Savings Certificate? Market has not been good at all for me. It maybe good for others, but not for me.

Query from a friend


Completely agree that market has not been good for you, but instead of seeing what the market does/ should do let us look at BOTH – what the market does or what you will do.

1. Your behavior: Whether you should sell or not is not about whether the market will go up or down! It is about what you will do with the money. If you were to sell all the shares and put it in a bank fixed deposit, chances are you will get about 6% p.a. post tax. If you are happy when inflation is normally about 8%, is a call that you have to take.

When will you re-enter the market? The normal behavior of clients is to say ‘When the markets are on the recovery path’ – this means when the index is more than 22000? Mathematically that means the markets have gone up about 40% ALREADY. And 40% return could be the returns the market wants to give over the next 2 years! So once more you will be disappointed.

What will you do with the money? Invest in other asset classes like gold, real estate or debt? Fine. If you are happy with the returns that gold has given you in the past 3-4 years, I cannot blame you. If you think Real estate will give you 20% over the next 20 years, well no comments. Please see the longer term returns from gold and real estate – say over 35 years. You will be disappointed. It does not matter how long you look, debt and gold have given negative real return. Remember the saying ‘ there is no free lunch’?

Welcome to the cruel world.




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  1. hi subra
    Do you think it is time to pick shares or stay invested in mutual funds? i look at the markets- capital goods/ infrastructure( mid cap construction companies)/ select real estate/ PSU banks are looking so attractively priced that its tempting to dabble in them than put money in mutual funds.

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