Investing systematically in quality stocks/ mutual funds and waiting patiently will fetch inflation-beating handsome returns in the long run.
Investing in stocks directly requires expertise and time, something majority of stock investors don’t have.
Trading, except for a miniscule minority, leads to losses.
It is very difficult, almost impossible, to time the market.
For the vast majority of investors, mutual funds are the best option.
Most retail investors enter the market lured by stories of people making big money. Theoretically, trading can fetch huge returns. But in practice, it is a loss-making proposition. So, investors should invest, not trade.
So, refrain from gambling and reckless trading. Gambling is injurious to wealth. Systematic investment and patience will be rewarded. Investment in high quality stocks can create phenomenal wealth in the long run. Mutual fund SIPs too can give impressive returns. There are many largecap mutual fund schemes that have delivered 12 to 18 per cent XIIR (extended internal rate of return) in SIPs in the last 10 years. Many well-performing midcap and smallcap schemes have delivered 16 to 24 per cent
XIIR during the last decade. Even the average returns are impressive, beating all other asset classes.
To summarise, retail investors who have the expertise and time to invest, can invest directly in the market, focusing on high quality stocks.
Categories: Markets- Investing