Since childhood we are told, there is right time for everything in life. Right time to get education, right time to get married, right time to buy a house, but is there a right time to invest in equity?
We have often encountered investors who postpone their investments in equity. Many often cite events like elections, Budget, Global crisis, etc. to avoid committing money to equity. On the other hand, few of them feel that the markets have run up a lot and would start falling as soon as they invest, hence they would like to wait for some kind of crash.
We ran some back-testing to test long term returns even if one invested on inopportune times.
Let us say Mr. Panoti, an unlucky person, invested Rs. 1,00,000 in Sensex every year at market peak of that respective year. And Mr. Genius managed to invest only on the year’s low. While Mr. Average invested always invested in the middle of the FY, come what may. Can you guess their returns?
As you can see, Mr. Panoti’s returns have not been very inferior compared to Mr. Genius over a 20 year period.
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