Stick to original plan despite prevailing market trends

For most investors, a depressed stock market means a little more waiting in the market. However, for Rakesh Mishra it means anxious days ahead. Mishra had invested some money in stocks five years ago, with a view to fund his daughter’s higher education. However, Mishra couldn’t resist the temptation of benefitting a little more from the bull market. Against his original plan of taking out the money from the market six months ago, he decided to stay on till he actually needs the money. Soon after, the market started sliding. A worried Mishra is watching the market keenly for an honourable exit. Poor Mishra, unwittingly he was trying to time the market. He was hoping that the market will go up further and he can make more money if he stayed in the market for some more time. According to financial experts, it is a common mistake made by investors. “When the market is on an upswing, people don’t want to get out the market. Even if they had the original time horizon, they would extend it by a few weeks, thinking they will benefit more,’’ says a financial planner. “This is a costly mistake. In fact, it is simple logic. They are falling victim to greed, something which always force people to make wrong decision in the market.’’ So, what should be the strategy? “Firstly, you should always try to stick to your original plan despite the prevailing market trend. Changing your return target or investment horizon, based on the market conditions can often backfire,’’ says the planner. “Get into the stock market with a proper plan. Otherwise, you would be swayed by the market ups and downs.’’ His advice: get into the market only if you have three to five years to achieve your goal.