It is always prudent to analyse the market before investing in it. The typical advice for wealth creation is to invest when the market is down or showing potential for an upward move and hold or sell when it appears to have peaked. Financial advisers say biding time and waiting for the market to come down to make an investment may result in a loss of opportunity – which is so rare in this competitive world. So, what should be done when the market appears to have saturated?
All markets have a tendency to correct themselves. Experienced investors maintain a low profile when they see any hint of a market exhausting its appetite for rapid growth. Like now, when the Sensex and Nifty are touching their lifetime highs. While they may grow further, their rate of acceleration is likely to be slow. This is the time when investors look for options that may offer better returns on their investment.
If you have surplus money that is just sitting idle in a bank account, it is time to channel it to grow your wealth, primarily because money in hand always gets spent and because in the long run markets always perform.
1) Idle Money Does Not Grow
When you have money in your bank account, often you are tempted to spend it on buying items you don't need. You usually lose track of how you spent the money and only realise its importance once you actually need it to spend it in a meaningful way.
2) Markets Always Perform (In Long Run)
It is impossible to time the market in the short term, so waiting for the right opportunity is futile. It may never come. If there is a moment to invest, it is always now. No market will appear high if you visualise it 10 years down the line, meaning we invest in the future and not the present. The nature of the market, especially in a developing country, is that it is destined to grow.
3) Alternative Options
If you still feel sceptical about the promise of returns on your investment, try these options.
Real estate: Real estate is one of the most lucrative sectors to put your money into, but it requires large capital at once. It is also relatively a safe investment option.
Business: If you feel the market is unlikely to rise to your expectation, invest the surplus money in a business or venture that you have long wanted to set up. The returns are more dependent on how you operate the business and less on outside factors.
Gold: If you prefer a safe and less dynamic sector to put your money for long-term prospects, it should be gold. The precious metal usually gives good returns and the capital required is less than what you need for real-estate investment.
Cryptocurrency: A new, rising sector, it is being pursued largely by the young people, whose singular goal is to grow their wealth rapidly. That they are tech-savvy only helps them understand this sector better.
Mutual Funds: It is slightly different from investing directly in the equity market. Put simply, when you invest in a market you are the driver. But when you invest in mutual funds, you let the expert decide how to reach your investment goal.