Time in the Market, Not Timing the Market, is What Matters

Do you have any dreams? Or let me ask you a better question: have you ever put in the effort to make them a reality? If you have, big kudos! Because some just daydream and others roll up their sleeves, let’s not forget the folks who float in the illusion of their dream, and then there are those who not only chase dreams but catch them too. The parallel between dreams and mutual fund investments is intriguing. Both demand your precious time, undivided attention and a well-thought-out strategy. Those who have already accomplished it know it better, don’t you, friends? 

However, if mutual funds is a term that intrigues you, but you have little to no knowledge about how to advance your wealth through investments, this blog post is for you. Scroll down, as I Janhvi Dhuria, will guide you through the path of financial success.

Staying or Leaving: What Should You Do When the Waters Are Rough?

Have you ever found yourself in a situation where you feel like you’re caught between a rock and a hard place? Maybe you’re facing a tough decision that could have a significant impact on your future. Now, it’s easy to feel like giving up is the only option in such situations. But think about it: if you give up at the first sign of trouble, you’ll never know what you could have achieved. That’s where patience and perseverance come into play.

Investing is a perfect example of this. It requires careful consideration, patience, and a willingness to weather the storm. Just like in life, investing has its ups and downs. Sometimes, the waters are rough, and it can be tempting to jump ship. But if you stay the course and weather the storm, you may come out stronger on the other side. 

So, whether you’re facing a difficult decision or dealing with a rocky investment, remember to stay focused, keep pushing forward, and don’t be afraid to seek help along the way.

What are the Benefits of Staying Invested in the Long-Term?

Now that you understand that successful investing requires staying invested for the long term, you may be wondering why it’s beneficial to stay invested even when the waters are rough. This is a valid concern. After all, wouldn’t it be smarter to abandon a ship that could potentially sink at any moment? However, in my opinion, it’s not really the best idea. Consider this- what if you jump ship, only to find out later that the waters weren’t as rough as you thought? You would have missed out on the opportunity to reach your destination. Similarly, if you pull out of the market during a downturn, you might miss out on the recovery that follows. To clarify my point, let me share with you some benefits of staying invested.

Turbocharge Your Wealth with Compounding

One of the biggest advantages of staying invested in the long term is the power of compounding. In simple terms, compounding is the process of earning interest on interest. 

Think about it- when you invest in a mutual fund, you not only earn returns on your initial investment, but you also earn returns on the returns you’ve already earned. Over time, this compounding effect can lead to significant growth in your investments. In fact, experts believe that the longer you stay invested, the more powerful this effect becomes.

For instance, if you invest Rs. 1,00,000 today with an annual return of 12%, it will grow to around Rs. 1,76,000 in 5 years. But if you leave it untouched for another 10 years, your investment will increase to nearly Rs. 4,66,000. Now, that’s the power of compounding!

So, if you’re looking to build long-term wealth, it’s important to stay invested and let the power of compounding work its magic.

Ease the Impact of Market Volatility

Predicting the financial market’s highs and lows is like forecasting the weather—sometimes it’s calm and sunny, other times it’s stormy and unpredictable. But here’s a nugget: if you are in it for the long haul, the market volatility tends to mellow out. Typically, long-term investments are like a steady ship in the sea—fewer ups and downs and more chances of sailing towards good returns.

The Secret to Predicting the Financial Market

Do you know that feeling when you perfectly plan an event, and things seem to work out according to your plan, but something happens in the end that changes everything? It happens to me most of the time; I am sure you must have faced a similar situation once in life. So, what I am trying to put is not everything follows the script we have written. Sometimes, it does, but when it comes to mutual fund investments, you don’t stand a chance unless you have a strategic plan.

Consequently, the difference between predicting the financial market and the weather forecast is that the weather forecast might be accurate. Yep! The only way to accurately predict the financial market without knowledge of investments is to become a Jyotish, which I am sure you can never be. I mean, C’mon! It sounds as impractical as forecasting the returns of the financial market and yielding profitable returns on your investments by timing the market. Apparently, staying in the market is the last call. Now, I know that making investment decisions based on words is arduous. So, here’s data depicting the benefits of staying in the market.

Do you remember John Doe? He and his friend decided to invest in mutual funds together. They both had the time and money; sadly, Mr. Doe’s friend was scared that he might lose his money. So, what happened was that Mr. Doe and his friend invested Rs. 1,00,000 at the lowest value of 5116.81 in BSE 100 on August 28th, 2013, and gained a profit of 25% by December 9th, 2013. Apparently, their initial investment amounted to Rs. 125059.56.

Now, here’s the twist: Mr. Doe’s friend decided to redeem his funds and invest when the market was at its lowest again, which is ideally not recommended. I mean, who knows what is the lowest? It might fall more than you expect. On the contrary, Mr. Doe left his money the way it was; he even suggested his friend do the same. But his greed for profitable returns didn’t let him sleep peacefully; he continued redeeming his investments when they accumulated profits and reinvesting at the market’s lowest.

Anyway, after ten years, they both decided to redeem their funds on December 28th, 2023. John Doe received a return of 34%, and his initial investment accumulated to Rs. 1841520.47. Conversely, his friend’s investment accumulated to Rs. 1898661.07. The difference between their returns is Rs. 57,140.60.

Now, I know some of you think that John Doe’s friend gained more than him. No doubt he did, but at what cost? John Doe stayed in the market without dancing with his investments and without stressing like his friend. My point is that your investments demand time; remaining invested or meddle with them is your decision. However, Mr. Doe’s friend’s idea is impractical unless you are Jyotish or have all the time in the world.

Consult a Financial Expert for Financial Success

Have you ever tried learning any hobbies, like kung fu or guitar? If you did, you must have approached a coach or a professional guitarist, right? That’s how things work; you consult an expert to learn things. So is the case with investments. However, mutual fund investing isn’t a hobby; it’s an efficient way to advance your wealth. You don’t want to learn everything about investing overnight, risk your finances, and dampen your returns, do you? Some might say they have the time and money; they will learn it. Little do they know they can worsen their financial situation by investing in the wrong scheme. 

I know you are puzzled, as initially I was talking about having the time and money, but now I am saying it’s not enough. But that’s what a mutual fund is- a jaw-dropper! Apparently, the best way to ensure financial success is to consult a financial expert. A financial expert helps you comprehend your income, expenses, savings, and objectives and suggests ideal schemes for making an informed financial decision. Consequently, a financial expert is like a doctor to your agonizing illnesses; he swoops in and saves your day!

On a Parting Note

If you have come this far, I hope you figured out that investing is fine, but staying invested is an art. Like art, your investments also demand skills, patience, dedication, and time. Now, you have to decide whether to remain invested or meddle with them. However, if you mess with them, be prepared for the repercussions because not everybody has time, like John Doe’s friend, and not everybody can bear losses; remember, his friend had the money. Ideally, consulting a financial expert and letting him help you make a financial decision is better than trying to time the market and suffer losses. I mean, why would you ever put yourself in a situation wherein you have to worry about the finances when you can sit back and relax while your investments evolve into a splendid amount? You don’t want that, do you?

With this, I will take your leave. Also, please share your thoughts on this post by leaving a reply in the comments section. And don’t forget to, check out our recent post on “Why Is Knowing Your Investment Horizon Necessary Before Investing in Mutual Funds”

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Disclaimer – This article is for educational purposes only and by no means intends to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the offer document carefully before investing.