A Systematic Investment Plan (SIP), more popularly known as SIP, is a facility offered by mutual funds to the investors to invest in a disciplined manner.
SIP facility allows an investor to invest a fixed amount of money at pre-defined intervals in the selected mutual fund scheme.
The fixed amount of money can be as low as Rs. 500, while the pre-defined SIP intervals can be on a weekly/monthly/quarterly/semi-annually or annual basis.
By taking the SIP route to investments, the investor invests in a time-bound manner without worrying about the market dynamics and stands to benefit in the long-term due to average costing and power of compounding.
Top-Up SIP
Top-up SIP is a facility that lets you increase your SIP by a fixed amount or percentage (say 10%) every year or at pre-defined intervals in line with an increase in your income/savings.
This Top -Up in your SIP allows your investments to be in line with the increase in the cost of living or inflation and helps you plan for your financial goals right.
It can also help you reach your financial goals earlier or create a larger corpus for your goal.
Mr. A Normal SIP 5000 Investor A started investing 5,000/month using Normal SIP for 25 years with 12% Rate of Interest Total Investment: 15,00,000 95,00,000 Final Corpus after 25 Years
Mr. B SIP with 10% Top-Up 5000 Investor B started investing 5,000/month using Normal SIP for 25 years with 12% Rate of Interest Total Investment: 59,00,000 2.07 Crores Final Corpus after 25 Years
Power of Compounding
When you invest regularly through SIP and invest for the long term, the benefits are magnified by the compounding effect.
The compounding effect ensures that you earn returns not only on your principal amount (actual investment) but also on the gains on the principal amount i.e., your money grows over time as the money you invest earns returns.
Deposit (or FD) is a low-risk financial instrument that is offered by banks, post offices, or Non-Banking Financial Companies (NBFCS).
You can easily invest in a Fixed Deposit and grow your savings at a fixed rate of interest, which is higher than interest rates offered by savings accounts.
The convenience of investing along with the safety of your deposit can help you plan your short-term and long-term goals easily.
At Bajaj Finance Limited, you get attractive FD interest rates of up to 7.25%, so you can save for your goals easily.
Investing in a Bajaj Finance Fixed Deposit is easy, as you can invest from the comfort of your home through an end-to-end paperless online investment process.
In today’s times of increasing market volatilities, investing in a Bajaj Finance Fixed Deposit can help you get assured returns and steady growth of capital.
So you can build your savings with no effect of market fluctuations.
DID You Know? Bajaj Finance is now offering interest rates of up to 7.00% on fixed deposit and 0.25% more for senior citizens.
What’s more, online investors get 0.10% extra (not applicable for senior citizens) – Invest Online
SIP or Systematic Investment Plan is a plan through which a person can invest a small amount in a mutual fund at regular intervals (monthly/quarterly).
Hardly pinches your pocket
Most of us spend some money every day buying and eating a snack worth around Rs 15 or 20. Just saving that amount enables one to start investing in mutual funds through SIP.
That’s how small an amount is required to get started investing through SIP
While we all love and deserve to spend our hard-earned money, keeping a small amount aside each month can go a long way.
How often do we spend Rs 500 just over a whim? We may decide to order through one of the many food delivery applications or may meet up with a couple of friends at a coffee shop. Before we realize it, we end up spending around Rs 500.
Thanks to rising income and a higher standard of living, it doesn’t pinch as much as it used to.
After all, Rs 500 is what a couple of movie tickets or a couple of pizzas cost.
Most mutual funds allow investors to start investing with Rs 500 per month.
For an individual who has never invested earlier, starting with Rs 500 per month is also a promising beginning.
Therefore, this becomes a great way for new investors to begin as regularly investing Rs 500 per month over a longer period wouldn’t impact the investor’s wallet even if there is irregular income due to job loss or sabbaticals.
Magic of compounding
Investors would agree that Compound interest is one of the most powerful forces in the world! This is because of the impact it has on one’s investments. Investing over a longer period will create substantial wealth.
Investing just Rs 500 per month can result in the following scenarios
Over 10 years, a CAGR of 12% will offer Rs 1.2 lakhs
Over 10 years, a CAGR of 15% will offer Rs 1.4 lakhs
Over 10 years, a CAGR of 18% will offer Rs 1.7 lakhs
Over 20 years, a CAGR of 12% will offer Rs 5 lakhs
Over 20 years, a CAGR of 15% will offer Rs 7.6 lakhs
Over 20 years, a CAGR of 18% will offer Rs 11.7 lakhs
Over 30 years, a CAGR of 12% will offer Rs 17.6 lakhs
Over 30 years, a CAGR of 15% will offer Rs 35 lakhs
Over 30 years, a CAGR of 18% will offer Rs 71.6 lakhs
Let us look at the illustrations which offer a CAGR of 12% across 10, 20, and 30 years.
Over 10 years, the investment of Rs 500 per month turns out to be worth Rs 1.2 lakh.
Over 20 years, it balloons up to Rs 5 lakhs, and over 30 years it swells up to Rs 17.6 lakhs!
We don’t lose our sleep
Over a shorter period markets tend to be volatile. Even after investing consecutively for 36 months, one may see that one’s portfolio is in red. If the invested amount is small, then a new investor can deal with this situation and not feel stressed about it.
If a new investor starts a SIP with a larger amount in a small-cap fund during a choppy market, the variance in a portfolio can cause the investor to chicken out and withdraw his holdings much before the magic of rupee cost averaging plays out
As the performance of a mutual fund in which an investor has started a small SIP improves, she acquires confidence to invest higher amounts.
Suitable for risk-averse investors
Some individuals only prefer saving in fixed income or debt instruments. Due to certain reasons, such investors prefer the security of lower returns rather than the opportunity presented by equity funds to beat inflation.
If they haven’t tasted the growth that an equity-based instrument brings in, introducing them to the same through small SIPs is a great idea.
Some investors may not stay through the course even though the monthly invested amount is tiny. Whereas some may realize the benefits of investing in equity-based instruments as well and may seek to increase the SIP amount.
Continue to invest in case of unforeseen circumstances
As the size of an investor’s portfolio increases, her confidence in the wealth-creating ability of mutual funds increases.
After experiencing market volatility and continuing investments regularly, the investor begins to appreciate the process of creating wealth by investing through small SIP when the mutual fund portfolio starts growing.
This offers a huge boost of confidence to the investor which may result in the investor bumping up her SIPs.
Acquire confidence to invest more over some time as our portfolio grows
We live in an uncertain world. Incomes have improved but job security, especially in private firms, is a big question mark. There may also be health-related situations that may cause an individual to stop working for a while.
We are also living in a time when individuals wish to make the most out of their lives. This includes taking a sabbatical to travel or quitting a well-paying job to start up.
During such scenarios, one may not receive a regular flow of income. Or the size of income could reduce. Small SIPs can still be kept going as they may not cause a huge dent in an investor’s pocket during such uncertain times.
Easier to develop the habit of financial discipline
Financial discipline is rarely something we are born with. We have to work on it. Let us take the example of goal-based investing. A newbie investor may start a small SIP to invest a certain amount over 5 years to achieve a goal.
However, after 18 months, this individual may be tempted to buy a new laptop and would be falling short of some amount.
If this individual decides to redeem the corpus which has been created so far, he may not only lose the opportunity of creating more wealth but would also fall back on his efforts to achieve his goal.
Therefore it is critical to adhere to financial discipline when it comes to investing. Starting small makes it easier to get used to this. It is worth creating a habit of putting aside a small amount.
Over some time, this would make it easier to deal with following a discipline of investing larger amounts.
Claim tax benefits
Investors who are starting their journey in the world of investment can look at ELSS to not only help achieve financial goals but also save tax. ELSS stands for Equity Linked Savings Schemes.
ELSS is riskier than the fixed income alternatives available for tax-saving under section 80C but has the shortest lock-in period among all these options. It also offers the potential for growth via equity.
Conclusion
Rome wasn’t built in a day. And neither is a huge corpus that can offer financial freedom. One can begin investing modestly and then slowly keep increasing SIPs without being influenced by noise.
Once an investor signs up to ride several market cycles then there is no looking back.
This is because the investor begins to understand the importance of continuously investing during good times as well as bad. Small SIPs are bound to do wonders for our financial health.
The treatment costs of illnesses have been rising, therefore the need to have health insurance cannot be understated.
Having Health Insurance is not mandatory from the government of India but ignoring it could prove costly. Various medical policies offer different features and benefits.
Health insurance policies are of two types –
1. Individual Plan
2. Family Floater Plan
In an individual plan only, you are covered and the sum assured is available only on your hospitalization, whereas in the Family Floater plan other members of the family can be covered.
The cover is available on hospitalization of any of the members who are covered under the policy.
You take a health insurance plan with a clear intent to protect your capital from getting eroded.
Hospitalization expenses can cause a serious dent in your savings which could include the cost of medicines, doctors and nursing fees, and prescription costs. There are health insurance companies that offer daily hospitalization cash expenses.
Pre and Post Hospitalization Expenses
While all insurance companies cover hospitalization expenses, still it is suggested that you check if the policy you intend to buy covers pre and post-hospitalization expenses.
These costs could cost you a lot of money depending on the type of illness and treatment required.
List of diseases Covered
The policy that you have could have a feature or enhancement to the current benefits which could be a result of insurance companies subscribed plan, regulatory mandate, or it can also be because the insurance company has decided to extend these benefits as you have not claimed for a long time.
Few medical conditions which are covered can be extended, so one needs to be in communication with the health insurance company.
Top-Up
There are instances like getting a promotion or a salary hike, birth of a child where you might feel that the current health insurance coverage might not be sufficient and you need to enhance your cover. Getting a new health insurance plan can be a new process.
This is where the top-up option comes in handy. It allows getting an extra sum assured on top of the existing cover. Unlike a new plan, you don’t have to go for medical screenings for buying a top-up.
Income Tax Benefit
Payments made towards Health Insurance qualify for deduction under section 80 (D) of the Indian Income Tax Act.
If you buy health insurance for yourself or your family then you get a tax deduction of up to Rs 25, 000 and if also take a policy for your parents who are senior citizens then the tax benefits available increases up to Rs 50, 000.
Additional Benefits
You can also opt for additional benefits like the cover for ambulance charges, day-care procedures, health check-ups, and vaccination charges.
We are trying very hard to make savings which could come in handy as the economy of our nation India continues to steam ahead.
Effective financial planning is needed to consider your financial requirements and goals. People will always search for financial instruments which give them higher returns on investments.
Term Insurance Policies are a financial instrument that helps you to get the benefits of protection and tax benefit.
It helps the family to stay financially secured in case of the demise of the policyholder, therefore, buying a term insurance policy is an important instrument when one thinks about taking life insurance.
Online Purchase of term plans can be the first crucial step toward making a successful financial strategy. It offers you protection against the unknown and can be used as a supplement for retirement income.
Buy for the Right Reason
You need to analyze the need you want to take up term insurance. You need to remember that you are buying term insurance for a specific purpose that offers cover to your family in case of your demise.
Tax benefits can’t be the main reason for your decision to purchase Term Insurance. This policy funds your retirement and the education of your child. If you are buying this at a young age then it would cost you cheaper.
Deciding the Cover Amount
To arrive at the final sum of term insurance, customers need to estimate their annual income, salary, monthly expenses, current and future expenses like school fees, the mortgage to take care of the financial requirements of their family after their demise.
Tenure of Policy
The tenure of your life insurance policy needs to be Retirement Age minus the Current Age, if your current age is 35 years of age and you want to retire at the age of 60, policy tenure would be 25 years. Some plans offer high life insurance cover till the age of 75.
Additional Coverage & Benefits
Add-On is riders that you can take along with a base cover, some of them are critical illness rider, accidental death benefit rider, waiver of premium.
The benefits are available at a higher premium which is added to the base premium. We need to understand the importance and relevance of these riders so that a proper selection of the riders can be done.
Credentials of Life Insurance Company & Its Claim Expense
Before you finalize a life insurance policy, you would need to be completely assured of the credentials of your chosen life insurance company.
Factors which one should look at include Assets under Management and Solvency Ratio.
ULIP or Unit Linked Insurance Plan is a financial instrument that is a combination of insurance and investment. Under a ULIP, the premium paid is divided into two parts.
One part is to provide for your life insurance cover while the other part is put in investment products such as bonds, stocks, or mutual funds.
The life insurance cover depends on the sum insured, the higher the sum insured, the more the premium.
The investment fund comprises units in equities, debts, or hybrid funds. The value of such funds/assets depends on the prevailing market conditions.
The sum insured is usually the original sum insured or net asset value of all units (whichever is higher) or both.
An endowment plan is a traditional life insurance plan which guarantees a lump sum amount/payout post the survival period or on the death of the policyholder.
Apart from providing life cover, an endowment plan helps in creating savings over the investment tenure.
The savings amount is released on the maturity of the policy or to the mentioned beneficiary/nominee.
There are two types of endowment plans, one with profit and the other without profit.
Also, there are multiple variants of endowment plans which are a mixture of life cover, savings, retirement, pension, education, money-back, etc.
Which is Better? ULIP or Endowment Plan?
Criteria
ENDOWMENT PLAN
ULIPS
Type
Insurance cum savings
Insurance cum investment
Lock-in
Depends on the plan and premium payment term, usually 2-3 years
5 years
Investment Decision
Does not have investment decision power for policyholder
Comes with investment options which can be chosen by policyholder
Transparency
Lacks transparency as there is no investment portfolio
Can easily track your entire investment portfolio
Maturity
The policyholder will receive sum assured plus bonuses, if any
Redemption of units at the prevailing unit prices
Fund Switching
You cannot make any changes to the policy
You have the option to make fund switches to the entire investment policy
Withdrawal
There are restrictions and penalties upon withdrawal
You can withdraw from the policy post the mandatory 5 year lock-in period
Returns
Guaranteed fixed amount
Depends on market performance
Why Invest in an Endowment Policy?
Guaranteed Returns
Endowment policies offer guaranteed returns upon maturity/survival/death. The returns offered are independent of market performance and help you create savings.
Bonus
In a participating policy, the insurance company distributes a part of its profit in the form of bonuses to the policyholder. Simple Reversionary Bonus and Terminal Bonus are added to the policy over the investment tenure.
Long Term Financial Goals
An endowment plan offers high returns when invested for the long term. This will help you achieve your long-term goals effectively.
Why Invest in ULIP Plan?
Flexibility: Under a ULIP, you have the flexibility to:
Switch the investment funds
Make partial withdrawals
Make lump sum additions in the form of top-ups
High Returns: Since ULIPs offer different types of investment funds, some of these investment funds are equity-based which offer high returns over the investment period.
Rider Options: You can enhance your ULIP scheme with rider add-ons such as accidental death rider, term rider, and critical illness rider by paying an additional premium.
Transparency: ULIPs offer complete transparency. You can keep track of your investment portfolio. The policy provider keeps you informed of all the charges levied, the number of units issued, etc.
Financial Security: Over the entire investment tenure, ULIPs allow an investor to accumulate a huge corpus which can be utilized for retirement planning, child education, marriage, etc.
Funds Switching: You can easily switch between the investment funds and revise your entire investment portfolio if needed.
Raising one’s child to become the best version of himself/herself is the biggest responsibility of the parents. From nutrition, healthcare to education – you want to provide the best in everything to your child.
Apart from that you also have to make sure that their future is secured.
And the only way to achieve this mammoth task without hurting your own financial future is by investing through mutual funds.
1. Goals for your Child’s Future
The first step towards investing is to know what you are investing for, i.e. what is your investment goal. Now, as parents, you need to have financial goals set for your child.
For example, you have to save for your child’s school admissions, his or her college/higher education, maybe for a degree from a foreign university, his/her marriage, etc. Try to figure out what kind of money you would need to achieve each of the goals.
Say, for your child’s school admission you need to save Rs 2 lakh; or Rs 80 lakh for your child’s higher education, etc. This way you can turn your dreams for your child into financial goals.
2. Choose the right fund and start saving towards the goal
Since you know your goals, you should start saving towards them. Now, it is extremely important to choose the right mutual fund as per your goals.
For example, let’s suppose you would need Rs 2 lakh for your child’s school admission in two years. This is a short term goal, for which the main focus is capital preservation. Ideally, you should invest in Short Duration Debt Funds or FDs to achieve the goal on time.
Meanwhile, you might also want to save for his/her higher education. This is a goal that is at least 17 or 18 years away. And also, due to inflation, the amount that you would need would be much higher than it is today.
For example, an MBA course at a top-rated university costs around Rs 20 lakh today. And at the 10% annual inflation rate the same course would cost Rs 80 lakh in 15 years.
So to achieve this goal, you need to invest in equity mutual funds as they are your best bet to get inflation-beating returns consistently over the long run.
3. Start investing through SIPs to save towards your goal
The easiest way to get into the habit of disciplined investing in mutual funds is by starting a SIP.
Through a SIP, you put a fixed amount of money every month towards your mutual fund investment, which over the years helps you achieve the target amount in time.
For example, say you want your child to attend a top-rated B-school and for that, you need to save Rs 80 lakh in 15 years. If you choose to invest in a mutual fund through a SIP, then your monthly SIP amount would be Rs 16,000 every month to reach the goal on time (assuming 12% average annual returns)
4. Increase your SIP investments periodically
As every year your income and salary increases, you should also increase your SIP investments every year. This can be a fixed 10% every year or as per the percentage of increment in your salary each year.
Now, this timely boost every month can make a huge difference in the final amount that you will receive. Let’s explain this with a two case scenario.
Say you want to save Rs 80 lakh in 15 years to be prepared to send your kid to B-school. In the first case, you keep investing Rs 16,000 per month all through to reach the goal in time.
Meanwhile, if you keep increasing the investment amount by 10% every year, you can save Rs 80 lakh in 12 years. (In both the cases the return amount assumed is 12% p.a., though there are no guaranteed returns.)
And if you reach the goal early, you will be much well prepared when it’s finally time for your kid to go to B-school.
5. Do not stop/skip your SIP investments
To achieve a financial goal on time, this is the most important thing to follow. That is, never stop or skip your SIP investment. Remember, one wrong step can completely jeopardize your child’s future.
The most important future goals of your children are time-bound, like your child’s school, college education, or higher education.
So if you skip, miss, or stop your investments midway meant for such goals, it would mean you might not have enough funds when it’s time to go for college/university. So be regular with your investments.
However, if you had to stop investing for some reason, make sure to fill that gap later by adding money later.
Conclusion:
Ensuring that your child’s future is well secured is one of your biggest responsibilities. There are several milestones that they need to achieve at different ages. And you need to be financially prepared to help them achieve each of the goals.
So set the goals, determine the timeframe, and start investing in the right mutual funds.
1. You’ve invested a significant expense in your trip. If you have to cancel, you’ll lose that money.
Canceling a trip is a bummer enough. You don’t want to lose your entire trip investment on top of it. The Trip Cancellation benefit covers you in case you or a family member becomes ill or seriously injured before your trip, or if there’s a death in the family.
You can also be covered in the event of natural disaster or bad weather impacting your home or destination, or if your travel supplier (such as an airline) goes bankrupt or on strike. There are more reasons too – read them all in the policy.
Don’t want to be bound by the reasons outlined in the policy? Upgrade your plan with the Cancel For Any Reason option and you can cancel your trip for any reason at all!
2. Once you’ve departed on your trip, plans can still go wrong. Unfortunately, baggage loss or damage is not uncommon. Neither are travel delays. Our plans offer coverage for these scenarios. And if your trip is interrupted and you have to leave early? Our plans cover that too.
So you can feel more at ease packing up to leave your loved ones and your home behind, knowing that if something happens, you have coverage and help to get you back home. You need coverage in case you get sick or injured while away from home.
And within the many plans provide limited coverage out of your region. If you get sick or injured on your trip, access to medical coverage is important.
This is not the case, particularly for visitors to other countries. Many travelers have been shocked at the cost of care abroad. And let’s go one step further…what if you become sick or injured on vacation and don’t heal immediately.
How will you get home? All our plans provide coverage for Emergency Medical Evacuation, enabling you to get to an adequate facility for treatment, then transported home if needed.
3. A travel protection plan gives you access to 24/7 assistance no matter where you are in the world.
Let’s say your passport was lost or stolen in Europe. Or your prescription medications were left behind in a hotel in Buenos Aires.
Or you twisted your ankle on a hike in New Zealand and need to find a doctor. Who do you call or where do you go for help? With our plans, it’s easy.
Your plan comes with access to 24/7 Travel Assistance services, available at any time, from anywhere in the world.
If at any point you have any question during your trip or need assistance with ANYTHING, you can call the numbers provided and get assistance from someone in your native language. Wouldn’t it feel nice to know that someone always has your back?
4. It’s a small price to pay to gain peace of mind.
We hope your trip goes completely smoothly. But think of the investment you made on your trip. Would you be comfortable losing it all in the event of a cancellation?
And perhaps more importantly, think of the huge expense you could face if you become sick or injured while traveling and need medical care or an evacuation.
Covering yourself for the risks will make your trip all the more enjoyable and relaxing. And that’s the whole point, right?
It is quite a well-known fact that according to Indian law, while purchasing a new car, purchasing a car insurance policy is mandatory.
A car insurance policy would help in the protection of not only the car but also the person driving the car in case of any accidents or damages.
But there is a lot of misinformation floating around related to car insurance plans, which leads to misconceptions among vehicle owners.
1. You are a safe driver and do not need car insurance
You might think that you are an experienced and safe driver, so there is no need to purchase car insurance.
This is a wrong perception. You might be sure that you are one of the safe drivers but you cannot be sure about the conduct of other drivers and road conditions.
In case your car meets with an accident and your car is not insured, then you would have to pay all the expenses incurred in damage of a third party car and also your car out of your pocket.
Moreover, the Motor Vehicles Act, 1988 makes it compulsory to have a third party car insurance policy while driving cars on the Indian roads.
2. Your insurance premium would be low if your car is older
Usually, it is said that the older the car, the lower would be the premium. It is believed that the IDV (Insured Declared Value) of your car is the main factor determining your car insurance premium.
So, if your car is older, then the IDV would be also less, and hence, you would obtain cheaper insurance.
However, this is not true always. In addition to the IDV of your car, there are several other factors as well, which determine the insurance premium of your car.
These factors can be your previous driving history, the distance you have traveled, your claim history, the category of coverage you have purchased, your NCB, etc.
In case you have made numerous claims in the previous year, then your premium for the current year would be high.
3. Purchasing a car insurance policy is a slow process
The fact is no, it’s not a slow process anymore. Technological advancements have made the entire process easy and quick.
You can purchase and renew car insurance policies online conveniently and with minimum documentation.
You just need to fill in the basic details associated with your car, compare car insurance plans online, and make an informed decision.
Your car insurance would be in your mailbox within some time. This process is cheaper and very efficient.
4. Claim settlement is a very painful process
This is one of the most common car insurance myths. You might believe that in case of an incident involving your car, you might have to take a lot of pain to get a CLAIM.
However, this is not a fact anymore. Claim settlement procedures are quite easy and can be done online conveniently.
You will have to log in to the insurance company’s website and fill up the claim form. In case of successful claim registration, you would be asked for submitting your documents.
You can obtain assistance anytime during the claim procedure by connecting with the customer care representatives or by referring to the FAQs present on the company website.
Conclusion
So, these are some of the most common and widespread car insurance myths among vehicle owners.
You must understand the differences between myths and the realities associated with them to fully appreciate the car insurance cover that you own.
Make sure to compare car insurance policies online and buy the ones which suit your requirements by providing maximum coverage with a nominal premium.
The markets are high and they look overvalued. Many are worried about the expensive markets. But the bigger questions that investors must ask, are the following.
1. If it falls, then by how much?
2. What if it does not fall much; i.e., what if it is a time-bound correction and not a price-bound one?
3. ‘When’ will it fall?
Now, let’s apply this logic to the stock market. A lot of investors are in a dilemma: ‘should we book profits for now and enter again when the market falls?’
Let’s say you execute this thought and sell all your investments today with the plan of entering the market again when it falls.
And let’s assume your decision is proved right and the market falls drastically in the next few days or weeks.
If that happens, it is not good news. This is because if you are proven right in this decision, you will do it again in the future.
That is, you will ‘time the market’ again and again. And this is a bad habit. If you time the market 10 times in the next few years and you are wrong just 3-4 times out of 10, you may still lose money overall, forget about making great returns.
Check the records of successful investors. Do they follow this practice? If not, why? If they cannot or do not predict the market, what are the chances of you being right?
We have to be careful about the kind of actions we take, as they will become a habit. If this habit is a bad one, it will be very tough to leave it.
Now, let’s see if we can answer the three questions asked earlier.
1. What if there is only a time-bound correction?
Correction can be price-bound, the way we had in 2008 and March 2020. And it can be time-bound as well. That is, the markets remain in a certain range for a very long time.
Examples:
1) From July 2009 till December 2011, again, the Sensex was range-bound. After moving in a range, the market started moving up again in both cases. If that happens again in the next few months or years, your plan to enter at low values may never fructify.
2) From December 1993 till February 1999 (for more than five years), the Sensex was range-bound between 3000 and 4000 levels.
2. If it falls, then by how much?
Did you invest a huge amount in March 2020? No? Maybe because you were waiting for the markets to fall more. We, as humans, have this deep desire to buy at the lowest level.
And who tells you where the bottom is? TV experts, your advisor, neighbors, colleagues, or friends?
Investing at the lowest point and exiting at the top is a matter of luck, not research. Therefore, the best strategy is to invest at every level. Even at today’s level in January 2021.
In a nutshell, make sure you are conscious of the habits you develop while investing in the stock market. This is what differentiates a successful and not-so-successful investor.
3. ‘When’ will markets fall?
I know investors who sold their portfolios in July 2020. The market had recovered significantly from its March lows and economic activity had hardly started.
Logically speaking, it was the right call. Many investors and experts were expecting the market to fall again.
We are in December 2020 now and we all know what has happened from July onwards. It is not about being ‘logically right,’ but about developing the right habit.
I also know a few of these investors who entered the market again in September-October 2020.
It was not easy for them to watch the markets grow continuously when they had sold their investments in anticipation of a fall.
