When is the best time to invest in Stock Markets?

Each of us have our own perspective when it comes to timing the Markets! If you look at where the India Stock Markets are right now, some would say the conditions are ripe for a much further move up; while some others would say the valuations are over-stretched and it is better to book profits. Well, to be frank, nobody knows what would happen tomorrow. Our guesses are as good as the toss of a coin!stock-market-investmentSo, where does that leave us?

My experience investing in over a decade says invest regularly. That way you won’t feel left out if the stocks move up; if they go down, your further investments would average out the ones you’ve already made. However, basic common sense would say a developing market like India should pay off in the long term, and that’s what it has done! Nifty50 – a widely tracked index of the Indian Markets – has a CAGR of 11.7% in last 20 years (since 1996) and 7.5% in last 10 years (since 2006). But one has to keep in mind that these are long-term averages, meaning there were ups-and-downs over these years. To put things into perspective, if you had invested a lump-sum amount just before the crash of 2008, your money would have taken a serious beating; but, if you had invested at the peak of the crash, you would have made a killing in the next few years. That’s why the wisdom says invest over time.

One basic mistake is to blindly go by the commentary of Analysts. Many have been advising since long that we are in the over-bough territory. If I had followed their advice, I would have not made record profits in each of the last few months! Though it might sound concerning, most of those profits have come from stocks that already rose a bit and my gut feeling asked me to still go with them. Having said that, I do maintain a balance between investing directly in stocks and also in mutual funds via sip route…the individual stocks might get hammered during tough times, but a basket of them would be relatively better off. It is essentially risk vs reward playoff.

This leaves us with using our best judgment when it comes to investing. If you have a long enough experience in the markets, the call will be relatively easy to make; but if you are a novice, you might burn your fingers initially. Again, that’s where investing regularly over a period of time helps and you learn in the process too!

*Picture sourced from here

30 thoughts on “When is the best time to invest in Stock Markets?

  1. I also agree with the first comment.. as a salaried person first priority is to pay off the mortgage.. lucky are the ones who have extra cash to play around.

    As i have said earlier I am too thick to understand or analyse the ways of the market unless offcource someone tells me go put some money here..

    But in today’s world to find that someone is like finding a needle in a haystack..😁

    Liked by 1 person

  2. There’s no right or wrong time unless you enter during the top curve part of the boom cycle. Like the pre-2008 years. Picking the industry leaders with strong performance and staying invested for a long period of time will allow you a couple of cycles to reap the benefits. A 10-15 year period should give you good returns.

    For those who can’t understand all of this, mutual funds or SIP is a good option. But again which mutual funds? Now that’s equally tricky.

    Liked by 1 person

    1. I would says MFs are easy to pick. Again, go with the sector-focused funds and those that are open ended.

      I’ve had a couple that did terrific for about 2 yrs till I got rid of them.

      Thank for adding your thoughts, Arvind.

      Liked by 1 person

      1. You are welcome, Alok. Generally index linked funds are also good especially when you are not at a wrong curve.
        Always a pleasure to exchange thoughts here. 😊

        Liked by 1 person

      2. I never invested in index-linked funds. The reason being – I wouldn’t have gotten a lot of alpha. I believe I am better off when I use my own capabilities to search through and that way I beat the decent returns I would get otherwise ☺️

        Liked by 1 person

      3. Definitely. I was referring from a common man’s perspective who doesn’t have time and inclination to get into analysis and details. If you have abilities and resources it makes sense to use them rather than paying for a professional to manage your investment. 😊

        Liked by 1 person

  3. Thanks Alok, for kind words on my blog. Appreciate it. Interesting to read this post – over here they often encourage the newbies- to invest in stock funds (i think its called in english?)- to limit the risk- if some companies doesnt go well, some of the others might etc… I agree – slowly over time is the best ( try not to think of those money at all):-) All the best

    Liked by 1 person

  4. I agree that perspectives differ. In this case, stock market works on guesses based on probabilities and trends. As you mentioned, timing is of utmost importance, so is patience and of course the knack of it too that not all possess. 🙂

    Liked by 1 person

  5. It is always challenging for investors predicting price movement or when to buy or sell, I think amateur investors and professional investors falls under the same umbrella trying to predict what’s the next move. Emerging markets in India and other developing markets, traders should apply the “Margin of Safe Principle” that is value investing.

    Liked by 1 person

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