Invest in equities? The index is already up 23% on a calendar basis…why should I invest in equities NOW?

Right? that is the first question that popped in your mind right now, did it not?

Well let us look at the reasons why you should be buying:

1. I have always said this : YOU HAVE NO CHOICE AT ALL: If you have Rs. 5000 to invest every month, where will you invest the same? It is only the equity market which allows you to invest small amounts on a regular basis.

2. P Chidambaram wants you to: really there is a lot that he is doing to make you invest in equities. No nothing positive, but squeezing out the returns in other asset classes! He is leaning on the RBI to reduce interest rates – not at all worrying about the suppliers of money. He wants to push RGESS, and he will do it well. More and more companies are opting for NPS – which means more money will come into the index. You cannot fight the big bosses, right?

3. Forget fighting PC, Ben Bernanke will set the world markets on fire with his philosophy of unending printing and zero interest rates. So as usual when the Indian markets go down FII money will come – remember net of currency fluctuation and inflation, INDIA still provides positive returns. Sadly Indians looking for 40% return in equity markets will burn their nails, fingers and hand. If yo are looking for a small positive REAL return, you will do well.

4. The technical and fundamental reasons for buying are STILL BULLISH. Even though the markets have given a good return over the past one year, and I do not like the ‘market p/e’ and some of the stocks pricing, a SIP is a good process to follow…

5. Your Retirement will be earlier than later: Immaterial of which field you are working in, retirement is going to be earlier than later…and if you do not have a big chunk of your money in equities, inflation is going to get the better of your portfolio…

more will follow…

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  1. Jitender Singh Mehra

    Dear Subra Sir,

    Indian economy is a developing economy and in any developing economy there are around 3-4 so called Bull run cycles. Market is like a rain cycle. The only difference is the latter one happens on yearly basis and the previous one could take around 10-12 years.

  2. Jitender Singh Mehra

    Dear Subraji,

    Indian economy is a developing economy and in any developing economy there are around 3-4 so called Bull run cycles. Market is like a rain cycle. The only difference is the latter one happens on yearly basis and the previous one could take around 10-12 years.

  3. Much of the equity market movements are these days depend on govt actions, global economy, central banks and FIIs rather than performance or merit of any company.

    I am not sure given the high lending rates, poor infrastructure, high fuel prices and super taxes, there is any busines that can generate 20% or more profits on Return on Capital these days. Looks like we are in era of stable growth and reasonable profits (10%) as like West and we might have to wait long to generate great profits from the equity markets.

    With shrinking take home pay with cut in variable component and higher expenses due to budget, my suggestion to most of the normal employees is to invest in tax saving instruments first (PPF etc.) and buy a home to stay and then look for equity if surplus available.

  4. I sincerely hope the majority think like krish, so that the future return potential of equities remains high. Only when the majority think and really invest in equities, will the return/risk ratio fall in equities.

    As if, PPF will save you from inflation. PC will be even happier.

  5. If you have Rs. 5000 to invest every month, where will you invest the same? Bank RD, PPF, Debt funds, commodity funds (ETF), etc. I do not understand first point.

  6. Dear Subra sir,

    Some where in this blog, I read that SIP WILL WORK FOR MUTUAL FUNDS ONLY AND NOT FOR SHARES. But you are saying now to do SIP in shares. Am I missing anywhere? Please clarify.

  7. Sir, You mean not SIP in Single share, but monthly investment in different shares. Sorry I irritate you. But your clarification is lot to me. Thank You

  8. The biggest paradox of our equity markets is that Indians send money outside the country to buy gold and the FIIs are bring in money to buy equity. Equity culture in India is poor and the concept of long term investing is dead. Everyone is in to make a quick buck and get burned. Then they promise never to come back. Returns are at the highest when the markets are pessimistic.

    Human psychology makes one invest at the top and redeem when markets are at the bottom. There are mutual funds out there which have given close to 20% CAGR over a period of last 15-20 years. This includes periods of recession, scams etc. Just cannot understand why everyone is so focussed on monthly/yearly returns and ignoring the big picture.

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