Is It The Right Time To Invest In the Equity Market?

It is often seen that first-timers or new investors are worried about the correct timing of investing in mutual funds or into direct equities. Getting started at the wrong point in the ups and downs of the equity market is the continuous point of stress for novice investors.

I sat down with the finance market experts at elearnmarkets to help you to get an idea about the ominous question - what is the right time to invest in the stock market? and is there, actually, any right time to invest in the stock market?

Is it the Right Time to Invest?

Yesterday was the best day to start investing in the stock market. If you missed it then the next best day is today. The worst day to start an investment is tomorrow.

Whenever the market touches a new high or a new low this question does hit everyone. When the market is high, people would wait for the market to take a downturn and when the market is low they would hope for it to go further low. However, in all situations, the question remains intact about the right time to invest in the stock market.

What these people fail to realize is that both bull and bear are the two optimum realities of the stock market which cannot be separated from the market. The long term investor should not be bothered by the two inevitable situations.

The market moves in cycles and cannot resist but changes its pace. Though this transition from one phase to another, it may take time but is certain to happen.

Is it Possible to Time the Market?

Buying the stock at the lowest price and selling it at the highest is a myth.

Even for the big investors, timing the market precisely and constantly is not possible.

They might take some calls that can hit the bullseye at some or most of their stock but doing it every single time isn't possible.

What most of these investors do is to fix the buying and selling zone and not the precise points. 

We all have the idea that the stock market is basically buying a stock at a lower price and selling it at a higher price but what if the share price comes below the buying price. What shall you do then? In this connection, remember:

The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies. — Benjamin Graham

The Focus should be on Investing for the Long Term rather than Timing the Market

The fact that investing in the stock market can create you a fortune if held for the long term is no longer a secret anymore.

The power of compounding can negate the effect of wrongly timed investment in the long run. 

Rather than fretting about when should you make that first stock purchase, think about how long you are planning to keep your money in the market. Different investments offer varying degrees of risk and returns, and each is best suited for a different investing time frame.

Look for the Investments and Not for the Market

Unless you are investing in the index fund, it does not matter much where the market is.

There are more than thousands of companies listed on the stock market and not necessarily all of these will be doing good in the bullish market. Similarly, not necessarily all of them will be going down in the bearish market.

If you keep looking for the good companies which are trading at discount and are fundamentally strong you will eventually get the good ones.

In other words, rather than chasing the market, track individual stock and keep a track of its prices.

Average Out - The Stressed Out 

By now we know it is nearly impossible to time the market perfectly. So, what should be the practical approach to start investing by avoiding the losses? Well, there are two approaches - one is to keep holding them for the long term and wait for the power of compounding do its magic and second is to buy more units on every dip in the value to stock you are having which will reduce your average cost of purchase.

If you are a mutual fund investor, I suggest you to invest through the STP or SIP mode of investing in equity funds.