Don’t try to board the running train..!!

Never run behind a running train or a bus. We all have been told this by the elders. And rightly so. However, the reality is just the opposite. Whenever a train is beginning to leave the station, people run behind it to board. They have such great practice that more often than not, they hold the bars beside the door and maintain their balance and get in. Commendable but risky.

Yet, there are a few accidents every now and then. Seeing the masters, some newbies try to perform this dangerous maneuver without taking into account various things, Newton’s law of motion, speed of the train, their own speed, number of people behind them and in front of them, etc. The result is an accident and sometimes the demise of a person.

So what is the point of saying all this? Don’t you see a striking resemblance between the above-mentioned anecdote with the Indian stock market?

The Indian stock market has been on a rally for a long time. Yes, there have been hiccups here and there but largely it has risen. If anything, it is behaving like Tejas Express — running nonstop at great speed. And this is compelling people to get on board this market rally and make a fortune.

However, is it is a good idea to try boarding a train running at great speed? Of course, not. The same is with the stock market. Valuations are at an all-time high. Imminent market crashes can result in wealth loss. And that happens more often than you can think. After a few sessions of rallies, the market does come down. And in such cases, retail investors lose the most.

Yet, so many of us are trying to invest our hard-earned money in the stock market. But why? This is because of the FOMO factor. The fear of missing out on something momentous is bothering people too much. They don’t want to be known as the people who missed the rally. This is like people who missed the investment opportunities in 2008 economic meltdown. Fear is one of the strongest emotional driving forces. And this can lead to actions that can be counterproductive.

If the stock market is not the train you would want to board without being sure, then what are your options? The best solution is a balanced advantage fund. These funds invest in both equity and debt and keep switching the allocation according to market trends. Here the fund manager keeps analysing the market situation and takes a call on investment allocation.

You must also consider proper asset allocation. We at Caterpillar will help you diversify your investments and make sure you do not have all your eggs in one basket. In general terms, 30% equity, 30% arbitrage, and 40% debt investment are diversified enough. But this is the difference you will see if you come to us. We will analyse your life goals and help you have a customised investment plan for the future.

Another less-talked-about option is the Systematic Transfer Plan. Here, you can transfer some amount of money from one scheme to another. This is done if a particular scheme is not doing as well as you would have expected it to. Again, we will be guiding you through this process all along.

We are not saying that stock market is a bad place to invest. Just that it is not for everyone and not every day is a good day to invest. Let’s not get carried away with the rally and feel left out. There are other ways of making money and they are safer. Caterpillar will help you identify those and consider your goals are a priority.

To know more call @ 817-827-1045

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