With markets at an all time high, should we wait before investing in stocks?




I am 22 years old and I am starting my investment journey. My goal is to save as much as possible over the next seven to eight years before the big spending starts. I plan to invest around ??40,000 per month of my salary and increase it in the following years. But since the markets are at an all time high, do I have to wait a year or two to invest directly in stocks?

—Aman Garg

Congratulations on starting your investment journey, the earlier you start investing the more it works in your favor. Your thoughts on how to make the most of your savings in the years to come are very encouraging. A monthly investment of ??40,000 with an annual increase of 5% can help you build a body of ??67 lakh at the age of 30, assuming 10% return per year. This accumulated amount can prove to be very useful for different goals at this age or you can also continue to focus on building wealth in the future.

While the stock market is at an all time high, making regular monthly investments and following in a staggered fashion to invest in the stock market can help you build a portfolio for the long term. This systematic investment approach will help you average investment costs through market cycles and this strategy always works in the best interests of investors. At the same time, you also develop a disciplined approach to investing when following a systematic investing strategy. Therefore, you don’t have to worry much about the stock market reaching an all time high to start your investment. You can invest in direct stocks, but investing through mutual funds may be better for you as these funds are managed by professional fund managers and also offer diversification across companies and sectors. To get started, you may want to consider setting up systematic investment plans (SIPs) in the following diversified equity funds:

Smart Index Fund (20%)

Parag Parikh Flexicap Fund (18%)

UTI Flexicap Fund (18%)

Mirae Asset Large Cap Fund (18%)

Canara Robeco Emerging Equity Fund (16%)

DSP Mid Cap / Axis Mid Cap (10%)

Harshad Chetanwala, is the founder of MyWealthGrowth.com. For questions and comments, please email [email protected]

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