Is it a good time to invest?

With the scenario worsening, there is one question on top of every mutual fund investor’s mind – Is it a good time to invest?

We Indians have a characteristic that is frequently recognised. For the most part, we are value-conscious. We seldom purchase anything by paying too much for it. We don't like parting with our money quickly, whether it's for a vegetable mandi or e-commerce. That has historically made us good savers.

Let's take a look at how this relates to the current state of financial markets.

Markets at low: The indices, the Sensex and the Nifty are currently trading nearly 28% below the January and February highs, thanks to COVID 19. With the situation deteriorating, every mutual fund investor has one question on their mind: Is now a good time to invest? Is this the correct response? It is debatable. Suppose you have a decent asset portfolio, a good emergency fund capable of getting you through at least six months without income in the worst-case situation. Ideally, you don't see an effect on your career or other sources of income. In that case, the question needs to be taken into consideration seriously.

Equity is for things you need a decade later: We don't recommend speculative investing during a market downturn in the hopes of making a fast buck. That's a risky game to play. However, for those willing to consider and stick to long-term plans (10 years or more), now is a once-in-a-decade chance to raise your investments.

For fund managers, it’s akin to a one-time sale: Almost every company on the Nifty or the Sensex is trading at levels far below their peaks or even near year-end lows. It involves businesses whose stock prices have risen solely due to investor optimism. However, some companies are shining examples of Indian industry and have contributed to India's status as an economic powerhouse. TCS and Infosys, which employ tens of thousands of Indians and have helped bring India on the global map, are trading near year-end lows.

These businesses have been through several crises and are in a much stronger position to handle another one. When such enterprises trade at such lows, it presents an excellent opportunity for the fund manager because there is no underlying explanation for their share prices to have collapsed apart from the pandemic. It is especially true if their research indicates that the pandemic's effect would be short-term (up to two years) rather than long-term negative. The majority of them, like you, are value-conscious. If companies had the choice, they would choose to buy shares in good companies at lower prices rather than higher prices.

All in all, the above points indicate that there is no such specific time to invest. Share market and Portfolio Management is a long term thing and should not be compared to the highs and lows of the market. However, it gives an added advantage to those looking for investment in the dire periods. Many funds are available which can be liquidated easily into cash in times of need.

So, what do you think about investment at this point in time?

Comment below and share your opinion.