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Posted On Wednesday, Aug 03, 2016
Independence Day is approaching and it’s typical for us to start celebrating much ahead of the awaited day. The premature jubilation is triggered by blaring announcements of mega sales in shops and malls. Once the trumpets are blown, it takes but a few hours for an army of shoppers to invade the stores. Outdoing this army is a new breed of shoppers who furiously tap their keyboards and smartphones in a mad rush to buy their favourite products online at the lowest rates. The serious shoppers would have finalized their shopping list, while the impulsive ones would be only too glad to have yet another excuse to go shopping. The shopping spree tends to make sense for most (even the most compulsive shoppers convince themselves!). By and large, the aim is to buy coveted stuff at low prices, which is nothing but rational.
While most markets are flooded with shoppers during mega sales, there is an exception – there exists a market which curiously repels buyers during the sale season. As such, there is nothing awful about the market or the sale – it’s just like any other sale at which products are available at attractive prices. Invariably however, buyers run away from this sale, refusing to buy even their favourite products. This perplexing behaviour is witnessed in one of the largest markets of the world – the stock market. Most shoppers who rush to malls during a mega sale will often hide or run away from a sale in the stock market.
What is it about the stock market which makes the same person behave in a completely different manner? If we ponder the question, a small difference will be noticeable. Malls and shops prominently display the rate of the discount, while no such indication is found in stock markets. It is the absence of this one thing which causes remarkable changes in buyers’ behaviour. For a buyer, it’s important to know the entire deal. A sign that says ‘Up to 50% off’ is more comforting than one that just implies ‘Sale’. Moreover, during a stock market sale, the discounts may get steeper over time and one may not know the lowest possible rate. It is this suspense which deters most buyers.
Notwithstanding all this, there is a small section of buyers – the shrewdest of the lot – that does not get intimidated during a sale in the stock market. Amidst the chaos, these clever buyers see an opportunity to buy quality stuff at bargain prices. Like others, they are unaware of the exact discount rate, but that doesn’t bother them. Instead of becoming restless, they adopt a time-tested rule for success – that of being consistent, even in trying situations.
Adopting consistency can be difficult when it comes to investing. Knowing this, the financial market offers a wonderful tool, one that automatically enables investors to be consistent without feeling the pinch in adverse conditions. The name of the tool is Systematic Investment Plan (SIP). By opting for an SIP, investors stand to benefit during all times.
Under mutual fund’s SIP, a fixed amount of money is invested at regular intervals, which imparts consistency and discipline in one’s investment approach. The quantity of purchase is adjusted according to the prevailing market rates. In other words, when the markets are high (implying products are expensive), fewer units are purchased, and when the markets are low (implying products are discounted), more units are purchased.
With a systematic investment plan in place, investors needn’t get hassled over hunting for discounts, nor do they need to be too wary of buying at costly rates. They can get the benefit of a strategy that automatically selects good deals and offers the potential to earn attractive returns over the long term.
On this Independence Day, as you shop for clothes, shoes, bags, books and gadgets, ensure that you opt for investing in a mutual fund through a Systematic Investment Plan. That way, you can make most of the discount offers (whenever they arise) in the stock market.
Disclaimer, Statutory Details & Risk Factors:
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Mutual fund investments are subject to market risks read all scheme related documents carefully.
Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
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