Last Updated on March 6, 2025 at 9:08 pm
Each time the stock market falls, a new generation of investors learns how risky it can be, especially small cap and mid cap segments (which includes the Nifty Next 50). Equity investing is challenging for two reasons.
1) It requires incredible patience, discipline and conviction. See: Now Is the Best Time to Invest: Do not stop or redeem your equity investments! These qualities are rare in most individuals.
2) Superficially, it seems like a kind of a catch-22 situation. You don’t have enough money to stay with a fixed income and avoid equity. But if you choose equity, there are no guarantees it will provide returns.
The first part is more challenging to fix. Is it possible for life to teach a person patience, discipline and conviction if they are not born with it? Sometimes yes, and sometimes no!
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Want to create a complete financial plan? Learn goal-based investing? Exclusive access to our DIY tools? Increase your income with your skills? Use this link to enjoy massive discounts on our robo-advisory tool & courses! 🔥
The second part can be handled by digging deeper. Investing in equity (as part of a balanced portfolio) offers a reasonable chance of beating inflation over the long term. Nothing more, nothing less. See: Why should I invest in equity mutual funds when there is no guarantee of returns?
A reasonable chance means the likelihood (qualitatively) of success is better than a coin toss if we stay invested for a long time (how long is hard to say; the minimum is 10Y, but preferably much longer).
You do not get such odds when you marry (that it will last) or go to college (that you will get a good job or a career, etc). We go through life with unknown odds and no guarantees of success, and we cannot take things for granted and must work on them daily. Equity investing is no different. Why should we seek special consideration from the stock market?!
Also, the market is not obligated to provide us with the return we seek. Inflation is a variable number, and so is equity return. As a country develops, inflation and equity and fixed-income returns will fall. So, our return expectations after tax should be taken into account. See: Equity may beat inflation, but that doesn’t mean you will!
So you must invest in equity, but you must do so after appreciating risks and recognising that there are no guarantees of success. This is hard for many to grasp. If you can appreciate it, then this is how you can be good at (equity) investing.
- Be clear about your goal.
- Choose a suitable asset allocation.
- Invest as per that asset allocation like a machine.
- Increase investments as much as possible.
- Learn how to manage risk in your portfolio in a goal-based manner.
- Rebalance your portfolio at least when the deviation in asset allocation is 5% or more.
- Systematically reduce equity exposure well before you need the money.
- Once you start, portfolio maintenance should take 30 minutes a year (yes, a year!).
The freefincal robo advisor tool creates a plan for you that considers all these factors.
These are the technical steps. If you can keep your emotions under check (reason one above), you can implement them. Else no.
Use our Robo-advisory Tool to create a complete financial plan! ⇐More than 3,000 investors and advisors use this! Use the discount code: robo25 for a 20% discount. Plan your retirement (early, normal, before, and after), as well as non-recurring financial goals (such as child education) and recurring financial goals (like holidays and appliance purchases). The tool would help anyone aged 18 to 80 plan for their retirement, as well as six other non-recurring financial goals and four recurring financial goals, with a detailed cash flow summary.
🔥You can also avail massive discounts on our courses and the freefincal investor circle! 🔥& join our community of 8000+ users!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds, and ETF screeners, as well as momentum and low-volatility stock screeners.
You can follow our articles on Google News
We have over 1,000 videos on YouTube!
Join our WhatsApp Channel
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalised investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman (PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 13 years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), LinkedIn, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Increase your income by getting people to pay for your skills! ⇐ More than 800 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner seeking more clients through online visibility, or a salaried individual looking for a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you. (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting a side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media organisation dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact Information: To get in touch, please use our contact form. (Sponsored posts or paid collaborations will not be entertained.)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is designed to help you ask the right questions and find the correct answers. Additionally, it comes with nine online calculators, allowing you to create custom solutions tailored to your lifestyle. Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is designed for young earners to get their basics right from the start! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth exploration of vacation planning, including finding affordable flights, budget accommodations, and practical travel tips. It also examines the benefits of travelling slowly, both financially and psychologically, with links to relevant web pages and guidance at every step. Get the PDF for Rs 300 (instant download)