The question of how one can make more money is a thought that lives rent-free in most people’s mind. Despite this, fear is one of the most common things that hold people back from investing. Little do people realise that waiting on the sidelines, looking for the right time to start will result in long-term losses.
“Market tops and bottoms are only known after they happen,” said Vijay Mantri, co-founder of JRL Money. The best thing to do is to start when you have the money to actually start.
Instead of looking only at the returns, one needs to also asses the draw down that they are comfortable with.
“Worst loss I incurred was 58% draw down in 2008, but I didn’t take money out and it recovered with the market. Volatility is not risk as one cannot lose your capital permanently. Serious wealth cannot be made without drawdowns. Wealth needs to be made by accommodating temporary draw-down,” he said.
One can take signals from the market performance to anticipate and account for slips and losses to an extent. There can be strategies that are specific to the risk one is willing to take that can be adapted.
“Excess returns should signal incoming volatility. Micro, small and mid-cap are in challenging territory and better not to allocate fresh allotment,” said Mantri.