Time Is Important, Not Timing For Investments: Swarup Mohanty, Mirae AMC

The market has risen 118 per cent in the last five years, especially since the Covid-19 pandemic. As an investor, you may have experienced missing an opportunity to invest when the market was down or selling an asset when it was up. These sentiments are expected from a stock investor. However, relying too much on market sentiments for investing decisions can lead to a trap and, eventually, losses. Hence, one must weigh all the pros and cons before investing. Another general tendency is to look at returns while investing but ignoring other vital aspects, such as the product itself or its growth prospects in the market. So, one should look at it comprehensively.

Are There Any Best Or Worst Days For Investing?

Swarup Anand Mohanty, vice chairman and CEO of Mirae Asset Investment Managers (India), says that in the last 20 years if you missed out on the best 10 days of the markets, your returns would go down by 47 per cent. Similarly, if you missed the 10 worst days, your returns would be up by 52 per cent, said Mohanty during a session at Outlook Money’s 40After40 Retirement Planning Expo in New Delhi from October 4-5, 2024. He said investing during the market’s best and worst days can make a huge difference to the portfolio, but nobody can predict the good and bad days. It is impossible to know the best and the worst time until the time has passed. So, it is wise to stay invested and give time to your investments rather than timing the market.

Also Read: 40After40 Retirement Expo: Planning And Asset Allocation Are Key To Financial Stability, Says Puneet Sehgal

The Longer The Stay, The Shorter The Divergence

In equity, it is always said that the long-term is good, and the longer you stay in the market, the better returns you can earn. Also, the difference between the best and average returns narrows when investments are for an extended period.

Mohanty gave the example of the market on November 10, 2008, when it surged by around 5.8 per cent on a single day; however, the next day, it dropped by 6.5 per cent. It indicates that no one can accurately predict the market. Hence, instead of looking at the market’s highs and lows, one should invest based on their financial goals and investment horizon.

Deviance Reduces In The Long Term

Even if one misses the opportunity to invest on the worst day when the market fell and invest later at a higher level, the difference in returns could be significant in the short term, say one year or two years. But as the stay extends to a few years, the difference between the best and the average return lessens.

“In flexi caps, the best fund has given 63 per cent in a year compared to the average 42. But when you go to the 15th year, the best fund is at 16 per cent, and the average is 14 per cent. If you did not get into this predicting gain and just sat for 15 years, the average return you would get is 14 per cent”, says Mohanty.

So, the crucial point is not to focus on the timing of investment because no one can predict a favourable time, but on the time horizon, as the longer you stay invested, the better the chances for getting the best returns, even if it is not done on the best day.

Focus On The Time Horizon And Goal, Not Timing

According to Mohanty, “When we start investing, we think it is a return generation process; as we mature, we realise it is a risk mitigation process.”

In short, one should invest as per one’s goals, and not be swayed by market performance, returns, and all the euphoria or panic around it. This is the time-tested route to reach your destination safely! Mohanty says the investments should be about you, your life, and your goals, not the market or the performance of mutual funds or other schemes.