Is it right time to invest in stock market ? Every one ask this question when market is down and stocks look cheap. But it is also the time to be cautious while investing. Let’s see how to determine that Is it right time to invest in stock market or not.
To know that is it right time to invest in stock market, First you need to look at economic outlook. Investing in share market does not depends only on market conditions it also depends on your economic conditions. Start your preparation with below key points
Get prepare for long term investment plan
First and the most important thing is to be prepared to invest. Preparation involve the accumulate the money which you do not need for at least 5 years. You must be prepared to face any unwanted situation without that money. Investing that money is share market should not effect your future goals.
You don’t have such money to invest it means you are not prepared and you must stay out of this risky business. I do not consider investing as a risky business for those who have money which they don’t need for longer period of time.
This practice of investing unused money will save you always when you need money. Only those investors find success in share market who stay invest in right company. There are two things i mentioned here
- Stay invested: You must stay invested whether share market is all time down and you are more that 50% down from the buying price.
- Invest Right: Investing in the right company is more important then stay invested because if you are investing in the right company then you will definitely earn profit one day after seeing lots of ups and downs in the share market.
Identify current economic situation
This includes the economic status of current year. You must have to analyse GDP growth QoQ. As per current GDP report for quarter jul-sept 2019, the GDP growth is 4.5% which is the lowest of since 2013.
It means it might be the time to invest but stop. Don’t in hurry. Are you sure that the GDP will not fall further. First Identify the key factor which drives GDP.
Currently in India there is slowest demand generation. What does it means by Slowest Demand Generation. It means government is failed to generate demand from the consumer and end users side. Peoples are not ready to buy the things weather they are not so much costly.
Things are not costly but people do not want to purchase. Why ? there might be two reasons.
- Either they don’t have money: They might be facing difficulty to earn money to buy things. It happens in case of unemployment or Slow downs.
- Or they want to save more: They all want to save money because they see the economic slow down or recession coming.
It is still not clear that Is it right time to invest in stock market then whats left. lets see the next point.
Prepare road map that depict, how countries economy might behave over the next 5 years
Prepare the road map for your countries economy for next 5 years. These might involve various thing. such as Government Leadership changes, Government Focus change, key sector which can grow rapidly in next five years, Government investments, FDI inflows or outflows, Demand generation, Tax rate changes, Jobs creation over next 5 years, Central banks actions, Liquidity in the market and many more.
There are so many things which can be listed in your list and on the basis of this you will identify that the is it the right time to invest in share market or It is about to come.
Watch the Government’s activities and It’s focused areas
Watch the government focused area and try to fore see what’s gonna come next. For example government is focusing on giving waver to public banks and reducing corporate tax to increase the liquidity. Central bank RBI has also reduced the interest rates so that more money could flow into the corporate from the banks.
All Government action are not successful to generate demand so the next predicted government action could be direct tax reduction. Reducing the direct income tax might help in improving consumer demand.
Wait for the right time to get into the game
Now you know all about the current condition so why you have to wait. You must wait until you confirm that from now every thing will be good with the economy and Government actions taken to improve the market condition has started showing effects.
Market rarely gives chance to buy at the right time and sit tight without hesitation. But smart people makes the right choice and multiply there money with the market returns.