In our previous episodes, we stressed upon the aspect of staying invested in equities over long periods of time can compound investors wealth. However, it is easier said than done!
Equity investing has close parallels with the truest form of our favorite sport - Test Cricket. Investing like test cricket requires the patience to play a long innings, which is the assured way to victory. With time on their side in test cricket, you would typically find good batsmen playing defensively with the new ball or with a good bowler. Once they have ridden out the difficult phase, they can play big shots.
So, just as it is important to stay patient at the crease to play a long innings to succeed in test cricket, patience to stay invested in markets during difficult times is the key to success in Equity Investing. The difference between successful and unsuccessful Investing is in many ways, the difference between Test cricket and T20!
Periods of volatility can be unnerving and can even tempt an investor to get out of the markets altogether. For example, since Jan-2000 to September-2023, the Nifty 50 index has seen peak-to-trough return drawdowns of greater than 20% in 58 out of 284 months. While this might sound scary, during the same period, Nifty 50 index has compounded investor wealth by 12.4x or roughly 11.3% per year!
This clearly shows that, investors who typically have holding periods of less than one year are likely to believe that, ‘more often than not, people lose money in equity markets’.
Guru Mantra with Saurabh is a podcast series in association with Money9 where we dissect data & facts and try to explain why every Indian investor should seriously consider equity market for wealth creation.
Watch the third episode of the podcast series to learn more.
You can watch the other Episodes of Guru Mantra with Saurabh by clicking below:
• Why choose Equity as a...
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