June 13, 2021

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Markets at record highs. Should you delay investing in the market?

2 min read
Should you delay your investing. Nifty chart

With the NIFTY above 15,500 levels, are you unsure whether this is the right time to be investing in the stock market? It is true that with the markets at record levels, a correction may soon be due. The correction may come in a few days or a few weeks time, and is impossible to predict. For those unsure of whether this is the right time to invest, let me start off by quoting John Trusler “No time like the present, a thousand unforeseen circumstances may interrupt you at a future time“. Nobody knows what could happen in the future. The market correction one anticipated may not come, or may come at a strenuous time.

If you have some additional cash flow right now, do not hesitate to invest in the market irrespective of the market levels.

Idle money gets spent or deteriorates in value

Money lying idle in our bank account usually tends to get spent or gets invested in other immediately available avenues. The problem with the former is that it does not add wealth, and with the latter is that money invested in a haste may not fit your overall investment portfolio. Having an investment that is not in line with your overall portfolio tends to diminish the quality of your portfolio. This may affect your overall returns.

Procrastination is the enemy of success

Let’s say Bill starts investing at the age of 25. He starts a Systematic Investment Plan (SIP) with a monthly contribution of Rs.10,000 at 12% return. By the age of 45, he would get a return of Rs.1 crore. However, if he had started investing at the age 35, he would need to invest Rs.45,000 a month at 12% to get a return of Rs.1 crore by the age of 45. Delaying his investment by 10 years has cost him to shell out 4.5 times higher to get the same amount.

The future is uncertain

It is impossible for anyone to accurately predict how the market would react in the short term. However, in the long term the market has generally been in an upward trend. Money invested for the long term has compounded and built great wealth. Systematic, disciplined investing combined with patience is bound to yield high returns in the long term.

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