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Investing in the time of turmoil

Kartik Jhaveri, Certified Financial Planner, advises ?There is nothing like a wrong time to enter the market.?.

india Updated: May 19, 2006 11:31 IST

When the market tanks 850 points in a day, then there are three basic worries. Fear – will the markets continue to fall? Greed – Should I exit now or start buying that these levels? Panic – my investments have lost so much money… will they continue to do so? Says an investment consultant, “For short-term investor, this is an opportunity to buy in a falling market.”

According to him, a 6-7 per cent drop means that both mutual funds and stocks would be visibly cheaper. However, the downside is that, market being unreliable, the downslide could contin ue further. Also, there is a feeling that this volatility could continue till September-October if there are redemption pressures on the mutual funds and monsoons are not good.

However, what should you do if you are planning to enter the market? Advises Kartik Jhaveri, Certified Financial Planner, “There is nothing like a wrong time to enter the market.”

According to him, if one has a lump sum amount to invest then one should do it over a period of two months so as to spread out the risk. Experts say though one could expect more correction, there’s no need to panic. Says Jayant Pai, Vice President (institutional sales) Parag Parikh Financial Advisory Ser vices, “If you are a momentum player and have been in this market for two years, then you should book profits now.” Another investment strategy is to invest a lumpsum of 20-25 per cent in this market and put the rest into Systematic Investment Plans (SIPs). Says Hemant Rustagi, Managing Director, Wiseinvest Private Limited, “You could actually invest in three or four SIPs during the month to take advantage of the volatility.” That is, if you invest in three- four SIPs during different dates of the month then, if the market is down one week and up another, then you can gain from investing in different time periods. But if you’re already invested in funds, stay put.