It is not uncommon for people to confuse ‘time’ with ‘timing’. Investment should be done with due consideration to spending enough time in the market. Many others still end up overthinking or procrastinating too much to find the ideal stock and the ideal time to invest in it. This is not an advisable approach. While due-diligence, research and planning are very important activities, finding the perfect time to invest in capital markets in India may be more subjective than one would think. Let us examine if there really is a right or perfect time to invest.
Prerequisites to Investing in Capital Markets
Before we try and understand the right or ideal time to invest, there are certain key aspects that need to be considered before you decide to invest in capital markets. Some people may refer to them as ‘golden rules’ or ‘dos and don’ts’. Regardless of the terminology, they are as follows.
- Establish your financial goals and investment horizon. This may vary with people, some may be considering planning for retirement while others might be looking to buy a house. Being clear about your goals helps you set the timeline and target returns better.
- Identify your risk appetite. The old adage ‘no risk, no reward’ holds true in the capital markets scenario as well. While it is easy to get lured by higher returns, note that these returns are proportionately associated with risks. Set your tolerance limit and ensure not to exceed it.
- Aim for a diversified portfolio. Another old saying is ‘do not put all your eggs in one basket’. A diversified portfolio is the best way to hedge yourself from the upswings and downswings that are characteristic of the market.
- Research your stocks before investing. Carefully understand the features and what you are getting into. Avoid getting into the herd mentality of aimlessly buying since the stock is popular at the moment.
So, When is the Right Time to Invest in Capital Markets India
A common consensus is to invest in capital markets when it hits rock bottom. Well, this is easier said than done. While a certain level of up and down might be estimated but even the leading market experts can never fully predict what will be the lowest point. Clearly, if you continue to pursue this strategy, then you may end up sitting on the fence without any tangible investments in hand. Instead, you can keep tabs on the identified stocks and also check recent trends. Using the Moving Averages indicator is quite a beneficial tool here. When you feel they are low enough, this might be the right time to buy. Of course, one can deliberate that they may go lower still. However, no one can guarantee that. This is also where consulting an expert can help.
It is also rumoured that stock prices on Mondays are usually the lowest, making it the right time to invest. There is no evidence or data to back this statement; hence it is aptly termed a myth. The market works on the mechanism of demand and supply and there is no specific day that is ideal for investment.
If you consult financial services experts who run their own platforms and provide portfolio management as a service to thousands of investors, they are likely to give you the following pointer regarding the right time in investing:
- When you understand how the market works. Invest some time to understand the jargon and terminology, so you are able to understand the inherent workings better and be ready to invest.
- When you are thorough with the prerequisites mentioned in the earlier section, you are crystal clear about your overall investor profile and can choose your stocks accordingly.
- When you have the funds for investing. You may either have surplus money lying around or may need to plan a budget for investment. Avoid investing on borrowed money. This is inadvisable in most circumstances since the volatility of the market can never truly be predicted and you do not want to have further debts on your head.
One of the key takeaways from the above points is that, clearly, there is no right time to invest in capital markets in India. Yes, indeed, it is true that buying strong stocks with proven performance at low prices is definitely beneficial. However, the definition of a low price is rather comparative and subjective. Smart investors need to do a fundamental trend analysis and set a target price for themselves. The moment the stock hits that price, it is the right time to invest in it. On the other hand, it is neither healthy nor feasible to constantly monitor all the information on an hourly basis to assess the performance of your desired stocks. You can seek assistance from industry experts who are backed by a team of research analysts to help you invest at the right times and in the right stocks. Ashika Group is one such financial services expert, and you can check out their Dhanush app for more guidance and tips regarding investing in capital markets.