A helping hand from numbers leads to objective opinions and confident decisions!!!

Risk in short term say upto a year of investment horizon – losing a large part of your capital Risk in medium term, say investment horizon of 5 years: not matching up to fixed rate return (don’t forget to adjust for taxes) you would have realized had you invested in such instruments (say bank deposits) instead of equities. Risk in long term, say a decade or more: Here’s where things get complicated. I can think of single most important risk to long term equity investing - the geography you are investing in doesn’t see decent economic growth on per capita basis or in worst case - becomes a failed state . Equity markets mostly follow economic growth in the long term and they may not deliver in such situations. The first two “risks” are difficult to predict but easy to manage . The last one, which in my opinion is the “real risk” in equity investing may actually be easy to predict as there will be good many warning signs before such situation manifests. However, management of such a...

Uncertain times are upon us. There is a shadow of war post killing of tourists in Pahalgam. So far, equity markets have not shown any signs of cracking up despite of high expectations of armed conflict with our wayward neighbour. Is it the calm before the storm as far as equity markets are concerned? It is anybody’s guess that if a protracted war does happen, economy will take a hit in near term, which in turn will impact our daily lives, including equity markets. When and how this will happen is again anybody’s guess. Should you take a relook at your equity investments in such a scenario? Nothing wrong in being a little conservative in such times. Here’s what I think can be considered:     -           Scenario I: You have designated INR 100 for equity investments and are fully invested. While you do have money in non equity investments, in case of equity market downturn, YOU WILL NOT PULL MONEY OUT OF SUCH INVESTMENTS AND DEP...