When is the Right Time to Start Investing?
Do you have the same question in mind? Well, don’t worry we have the solution for everything you desire. The answer to whether the time is right to invest or not depends on three common factors which include - the purpose for which you are investing, the time duration during which you will stay invested, and the mode you have chosen for your investments.
Answer the following queries to get the right solution for your investment need.
What is Your Financial Goal?
If your goal is about tax savings, then time is not of any value in such a case. The reason being is that you need to save money every year to avail the tax benefit and your money will be locked-in for a period of three years. This, in turn, will help you make good income over the long term. Secondly, if your goal is attaining a relaxed retirement or simply creating wealth over a long-term horizon then also there is no relevance of the right time to start your investments. You would be benefited as long as you stay invested; and invest your money as early as possible. But, if your goal is fixed to be achieved in the coming few years, such as buying a car, or a home then timing makes sense. You need to plan the investments in the right way and at the right time to achieve it.
How Long Can You Stay Invested?
Once the goal is set, next you need to decide is the horizon for which you can stay in your investments. If your holding period is less than five years that may be related to your short-term goals of buying a car or house, then you should start your investment in equity plans right away. If we consider the rolling returns of Nifty 50 in the past ten years, it can be analysed that there have been 20% chances that you may lose your money if you redeem the funds within one or two years of investment. When your horizon is more than five years, then you can give a good start to your investment when the market is at its bullish phase. In the case of sector-specific funds, timing is vitally important. The themes or sectors are perennial and can bust completely taking along with all your money. Such a problem doesn’t occur in the case of non-themed funds as they are actively managed by the fund managers.
How to Solve the Timing Problem?
The only answer to this question is the best systematic investment plan. Once you start a SIP in the suitable fund, the problem of timing the market automatically vanishes. You simply lead towards achieving your goals and rest of the part is done by SIP. It provides you the cost averaging as well as the power of compounding benefits. One becomes capable of generating higher income to create wealth. You can take the help of our SIP calculator as well to start your systematic investment plan efficiently.
MySIPonline has always tried to simplify your investment journey. You must get in touch with us or take the assistance of our team members to make the right choice of fund for your portfolio and achieve your goals within time.
- LTCG Tax Is Not As Negative As it Seems; Here’s Why?45494 min read Jan 01, 1970
- Sensex Plunges Over 1000 Points; Should You Buy or Hold Your Investments for Correction?46203 min read Jan 01, 1970
- Sensex Dives Nearly 840 Points: Things to Consider and Experts’ Take47213 min read Jan 01, 1970