Why must you invest in a falling market?

Imagine a smartphone you really like that you were considering buying, now imagine its price has fallen by 15-20%.

Nothing has changed except for the price, would you not buy just because the price has fallen?

Of course not!

The same is true for investing in a falling market, why would you not invest in a falling market when you have the opportunity to accumulate more units at a lower price?

This applies only if the fundamentals of your investments remain the same, it is only natural for your investments to also see a dip if the broader market is also going through a fall.

You should also be careful to not try to time the market and instead stagger your investments.

Get the Basics right

Before delving into the world of mutual fund investing it is imperative that you get the basics right.

This implies getting a few things in order before going ahead.

To use an analogy, imagine the foundations of a building being solidified before the storeys are given a thought.

Insurance: Make sure you have term insurance in case you have financial dependents.

Health Insurance: Along with term insurance this is another necessity, health expenses are never cheap and inflation will always make sure the struggle gets even harder.

Emergency Fund: Always keep aside a minimum of 12 months worth of expenses set aside before venturing in to any form of investment, you never know when life decides to take a nosedive.

The equity markets are at an all-time high with Sensex recently breaching the 80k mark.

This has been a reality due to improved earning results of Indian companies along with the slow and gradual shift is assets from savings account to mutual funds.

The continuation of the previous government has also played a role since this would imply the extension of the previous policies.

Whenever the equity markets hit a new high, it brings along with it a unique set of challenges for investors.

Mutual Funds as a form of investment instrument has gained prominence in recent times.

This can be attested by both, the number of new investors as well as the ballooning AUM.

Considering mutual funds is still at a novice stage, it is only natural for investors to be still at a learning stage.

Mistakes therefore should not come across as an aberration, listed below are some very common mistakes that investors commit.

In today’s rapidly changing economic landscape, retirement planning has become indispensable. It involves the strategic allocation of funds towards building a financial cushion for the future.

The essence of retirement planning goes beyond mere financial security; it encompasses the vision of a life unburdened by financial constraints and marked by independence and divinity.

As you embark on this journey, the timing of your investment plays a pivotal role.

Starting early allows for the maximization of benefits through the owner of compounding, laying a solid foundation for a secure and fulfilling retirement.

One of the biggest advantages of investing in Mutual Funds as opposed to other sources of savings and investments is the liquidity it offers.

To add to that, these days redemption can be executed online too.

So in order to check how long it would take for the redemption amount to be deposited in your registered bank account, SEBI had mandated all the fund houses to make their mid and small cap funds to undergo mutual fund stress tests.

Investors are today bombarded with information left, right and centre.

This overflow of information is at an unprecedented level today due to how easily information can be disseminated these days.

Point to consider here is that information does not necessarily imply that it is true, a lie is easier to spread but the truth is sustainable.

Information and knowledge are not the same, the former may be right or wrong but the latter is mostly right.

Humans are more glued to their screens than ever and therefore it is easier than before to accumulate views, in the process of gathering such views we often overlook the simple yet very important point that such views are more general in nature than personal.

There is a very good reason why they say the Person in ‘Personal Finance’ is more important than the Finance.