One should look for the time of investment in the market instead of looking at the future of the market. The before said line is a famous principle that everyone is advised to follow while investing in stocks. But trying to ponder over the above-said principle is not possible in real-time. The classic investors of all time are mainly focused on prudential investment practice as the human’s tendency is an idiosyncrasy in nature brooding over the upcoming returns. And, eventually, end up calculating the future returns.
The speculative fluctuation of movement in stocks is an interesting concept which needs to be paid attention to. The stocks will have a drop in their price during the period where the investor decides the correct time of investment. On the other hand, stock prices will have a skyrocketing effect, if the investors dump their stocks considering the current situation of the stocks.
The investors are often wrong in this concept if they are in the mindset of being protected from the fluctuating price cycles just because they have a floor of investment in the mutual funds. Observing the market positions, the mutual fund investors adjust their investment plans by it. They will stop their investment if the market is falling and do the same opposite during inflation. This a hazardous move with maximum risks.
The volatile market conditions are a suitable environment for systematic investment plans. The investors must invest meager when the market is at peak position and should buy more when the stock value is less through their SIP fund. The normal investment value will be dealt with in this procedure of investment. The investment value will also be demolished if the investors keep on investing more at high market positions and stop their investment during market stagnation.
The practice of the investors in investing less in high market situations and acquiring more when there is a fall in the market is the only key to the prevailing problem. The enemy of this kind of investment habit is the timing of kind. It is a futile idea as the market apart from being volatile is also fluctuated in nature during the buying and selling of stocks. And the market condition is the perfect instrument that cannot be determined based on its volatility.
The prevention from timing the market is the usage of the SIP investment procedure. SIP is a well organized and disciplined investment concept. The investors on a monthly period invest continuously through a fixed amount and frequency. Concerning the market situation, investors need to invest accordingly every month. The investors based on their raised pay scale can also increase their SIP amount in a matched progression on investment. The investment value of the investors will increase in due course of time with positive returns, by increasing the value of every investment.