Estimated reading time: 3 minutes 5 seconds
Nifty has given an absolute return of 29% since the beginning of this year and relevant questions in every one's mind are should I invest more or should I book profits? Where are the markets headed? Many savvy investors, learning lessons from 2008 crash, do not want to be caught in the downward spiral, if it were to happen in the future. But at the same time, they don't want to be left behind in the participation of the India story especially after the positive sentiment created with the election results.
Everyone, who knows a little bit about savings and investments, has wealth creation in mind. While we may tend to believe that the short-term events really make a difference, it is sticking to the basics that create wealth. Recently, there was a message circulating on the social media with a comparison between the returns on stock market and recent real estate deals, including the one belonging to late Mr. Rajesh Khanna, the yesteryear super star of Bollywood. The total return on the real estate was a whopping 2428 times however if we look at the annualised return over 44 years then it is 19.38%. The stock market sine 1980 over 34 years has given a return of 17.70% not accounting for 2-3% of dividend return. The lesson here is that you need to have a fairly long-term outlook in mind to create wealth, be it real estate or be it equity.
Much has been said about the basics of investing, however, I am summarising them below to remind all of us and not get carried by the daily market movements.
Basics of Investing
I have underlined words like Financial Planning, Asset Allocation, Risk Profile, and Exit Criteria etc. because these are important. Disciplined investing with patience is key to ultimately creating wealth and achieving financial freedom. If you have never made a financial plan for yourself and did investments randomly in the past then it is necessary that you take steps in the direction of creating a plan. Don't expect quick results but rather give yourself 6 months to 1 year to get everything in order. Better Late Than Never!
The writer is the Managing Director of Mitraz Financial Services Pvt. Ltd and can be contacted at firstname.lastname@example.org