INVESTING IS TOO RISKY

There are numerous instances of stock markets crashing. This gives the impression that investing is a risky proposition. However, over time, markets effectively gain in the long run. There are several segments of the stock market with different risk grade and the universe of equity mutual funds has funds with different levels of risk. Depending on an individual’s comfort with risk, there is a fund category or stock that one can invest in.

Moreover, individuals have different financial goals that are spaced out over time with different time frames—short, medium and long term. When investing for the long term, such as retirement in case of a 20something investor, the risk is evened out over a 20 to 30year investment time frame. As seen earlier, over the past 22 years, the Sensex has gained 10 times despite several dips in the market.

Choose investments that match your financial goal and investment time frame and chances are you will mitigate the investment risk. The key to making money in equity markets is not to get scared and bail out, but to stay invested for the long run over market ups and downs. ■

Seasoned investors are those who believe in spending time in the market than timing the market