The Power of Long Term Steady Investing

The Power of Long Term Steady Investing

Let me give you one real time example of me and my friend. In January 2008, the Sensex was at its all time high level of 20,870 and after that it crashed because of the news of global economic slow down. Today in November 2010, it is again the level of 20,890.

Now, after Jan 2008 crash, one of my very close friend told me that he is going to book a loss and exit from the stock market. He told me that he will invest again in the stock market from the bottom of the market levels.

After that in the end of 2008, the market was at 8000 level. Nobody knew that it was the bottom of the Sensex but my friend told me at that time that, the market will still go to 6000 level and from that level he will do the bottom fishing. The news papers were flooded with the news like, the Sensex may see very low from this levels also.

But well, nobody knew that, it was the bottom of the Sensex and from that level Sensex rebound back. My friend was very hopeful that the Sensex will again come down to 8000 level again and he will do the bottom fishing from that level. But that level never come back.

Now, let me tell you about me. I has invested in 4 equity diversified mutual funds at that time and I did not exited after Jan 2008 crash and I continue doing SIP through out these two years. And today at the level of 20890, my wealth is almost triple than the wealth of my friends.

Moral of the Story

- Never try to time the market

- The market is like pendulum. It will swing between two points (up and down) forever.

- The best time of investing in the stock market was 20 years before and the second best time is now. So Start Investing Now no matter what the market levels are right now.

- Stay Invested for the long run in Equities and you will definitely make lots of money from it. This is a century old theory.

- Nobody has crystal ball. So nobody can predict the next movement of the stock market. So don’t waste your time to predict the market movements. Rather than that focus your time and energy to analyze and find out fundamentally strong companies from the market.