3 common investment mistakes to avoid during bull markets
common mistakes. This article will explore these pitfalls and how to sidestep them for a more successful investment experience during bull markets. When the stock market reaches an all-time high, it's natural to feel uneasy.
The thought of a market fall can make you want to sell your investments and buy back later. After all, they say, "Buy Low, Sell High." But here's why this might not be the best idea: All-time highs are a normal part of long-term investing in stocks. They are essential for the stock market to grow and generate returns.
For instance, if you expect Indian stocks to grow by an average of 12% annually, the stock index must reach and surpass several all-time highs to achieve that growth. Over the last 23 years, the average one-year returns after investing in Nifty 50 TRI during an all-time high were around 14%. What should you do when the market hits an all-time high? Solution: You can stick to your predetermined investment plan and rebalance your portfolio if it strays more than 5% from your initial allocation.
Imagine you have money to invest, but the market has already increased. You might think, "What if I wait for a market correction before investing?" While this may seem simple, it's more complex than you think. The more you ponder this, the more you realise it takes more work.
For example, let's say you have ₹20 lakhs to invest, but as you wait, let's assume the market goes up by 10%. There needs to be more than ₹2 lakh. However, when you calculate this over 20 years, it can be substantial.
Solution: You can set up a rule-based framework for deploying new funds. Consider a combination of lump-sum and staggered investments over 3-6 months, depending on market conditions. In a bull market, many
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