The NIFTY index was over 21800 levels in the first week of February 2024, and you may not have invested back then, assuming the market will fall. Now, the market has fallen from those levels, and you may still avoid putting money in the market – the market may go down further. The sentiments are negative – inflation worries, global news and much more.
If you have had the same emotions in the last month, you are not alone. Emotions are investors’ biggest enemies. Hence you must practice to overcome them. Today, we will talk about how to invest in the market under all circumstances – market at high or low.
The problem
When the market is high, there are two investor categories:
- Type 1 – Investors who do not invest, assuming the market will fall. They wait for the fall to happen.
- Type 2 – Investors who assume the rally will continue and invest a lump sum to make the most of the market rally.
If the market falls from the highs, the Type 2 investor may be at a loss given he invested a lumpsum amount. Type 1 will re-evaluate when to invest – the market may fall more. If the market rises from the existing levels, Type 1 will continue to wait, and Type 2 will make gains.
When the market is low, the Type 1 continues to wait, and Type 2 may not have anything to invest in since they invested in a lump sum during the recent rally. Type 1 investors keep on waiting for the right time, and the money sits in the savings account – which is a loss because of inflation. Type 2 is gambling in a way and not investing.
There is always opportunity in the market
Investing is complex if you make it complicated. It is simple if you keep it simple. In the above examples, investors are trying to time the market. You should never time the market – rule number one. Please make a note of it.
There is always an opportunity in the market, even if the market is high. There is a bigger opportunity when it is low. You have to learn to find those opportunities. For a retail investor, it may not be possible to find that opportunity. The reason is simple, there are thousands of listed stocks, and evaluating each is beyond human limitation.
Hence, we have created Jarvis Invest – an AI-based investment platform. It scans stocks on over 1.2 crore data pointers and picks the best companies for you, irrespective of the current market condition.
Too high or too low, Jarvis always has stocks for you that have the potential to give you returns. It takes care of your investment horizon. For example, if you want to invest for 18 months, it will select stocks that have the potential to give returns in 18 months.
What is the right way to invest?
You may decide to use Jarvis or invest on your own. However, you can only be successful if you follow the basics of investing. The problem with most retail investors is that they forget the basics. We already mentioned Rule number one, now let us look at other essential parameters, you need to take care of:
Invest as per your goals: If you invest in the market without any goals, you may not go along in your journey. Having financial goals before you start investing is crucial. You should also know how long an investment is – short, mid, or long term. It will help you pick the right stocks and avoid stocks that are not in line with your goals and investment horizon.
Invest monthly: Retail investors can only invest a part of their monthly income into the equity market. You should not accumulate the money for months, waiting for the right time. Invest whatever you can in a month through SIP – in mutual funds or direct stocks.
Rebalance your portfolio: When the market is at an all-time high, you should rebalance your portfolio. Rebalancing means – getting back to your original allocation. During a market rally, your equity allocation will increase, and you need to sell some holding to bring the overall portfolio back to initial allocation. Check our detailed article on portfolio balancing.
Manage your risk: The equity market is volatile. Hence you have to manage your risks. Get out of stocks that can lower your overall portfolio returns. Jarvis has an inbuilt Risk Management System that continuously scans your portfolio and notifies you immediately if there are any red alerts. When the market is going down, there will always be some stocks that are hit severely. You should not own them, especially if you bought them at the wrong price.
The bottom line
The idea is simple – you should not be overjoyed when the market is going up nor too scared when it is going down. You should invest in the market as per your goals and continue doing it irrespective of market levels. Your cost will average, and you will get good returns over the long term. Visit Jarvis Invest and start your financial journey without any worries.