How to invest in current market conditions?

Does this question sound familiar? Bet it does. This is probably one of the most popular questions asked in any investor meet or television show.

qmarkThe answer is surprisingly simple and the reaction to the answer, in most cases, unsurprisingly indifferent.

In academic circles we have a saying. ‘No question is silly. However, some answers can be’.

So assuming we believe in this saying, is titular question silly or stupid? NO

So what is the answer?

The rules of investing and therefore the answer to this question is independent of current market conditions

  • Meaningful Investing requires:
    • a goal and a time frame
    • a knowledge of different kind of risks
    • an understanding that exposure to a different asset classes (stocks, bonds, gold etc.) will reduce portfolio volatility
    • diversification within an asset class
    • there is a couple of more things like rebalancing. However, this should do quite well for a start.

End of answer.

If investors do not understand this answer, they have two choices and only two choices:

  • Learn. It will take a little bit of time and  consistent effort.

OR

  • Get professional help. Consult a good financial planner. The fee that you pay will be worth it. You can choose to remain ignorant, provided you trust the planner and implement his/her advice.

Do you agree that the reaction to this answer will be unsurprisingly indifferent?

~~~~~~~~~~~~~~~~~~~~

  • I ask you, ‘how to run a marathon?’
  • You tell me, ‘you need to train for many months. Starting with short distances and then gradually increasing the distance’.
  • To this I say, ‘that is fine. Just tell me how to run a marathon?’
  • How would you react?
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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman is the co-author of two books: You can be rich too with goal based investing and Gamechanger. “Pattu” as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners. Contact information: freefincal {at} Gmail {dot} com He conducts free money management sessions for corporates (see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints.

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Updated: September 22, 2016 — 1:42 pm

10 Comments

Add a Comment
  1. How to run a Marathon? 🙂

    Really liked it.

    Thanks

    Ashal

  2. How to run a Marathon? 🙂

    Really liked it.

    Thanks

    Ashal

  3. All we need is just a little patience and keep learning 🙂

    1. Hi ,Mohit, the trouble this is bitter pill to swallow for most people.

  4. All we need is just a little patience and keep learning 🙂

    1. Hi ,Mohit, the trouble this is bitter pill to swallow for most people.

  5. I would say “Run with your legs” and experience even though 100 people can say how to run its you have to experience.. Similar in case of investing.. Learn and come up with your own strategy.. what works for you can never work for others.. and you cannot ask anyone after 20 years or 30 years why things did not work the way you planned.. so be accountable and learn abt finance to the level what you should know and invest.. After all working till 58 is also not bad if your have passionate to work.

  6. This post is very interesting and eye opener in precise manner. Dear Sir your post is too long some time. I like this post it is too short with behind lot of answer.
    This post is awsome.

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