Read very interesting data related to above discussion on a blog and thought it would be good to share it.
Let us take an Eleven year period âOctober2001 toOctober2012.
Remember this period contains the most spectacular rise and fall in the stock markets.
Let us assume youâve invested in Sensex during the above 11 year period. Of course good diversified equity funds have provided far superior returns than Sensex. You may visit our âSIP Crorepathiâ page for more details.
During the last eleven year period, if an investor would have missed out just ten best days in the stock market, a sum of Rs. 100,000 would have returned only Rs.2,50,270 as opposed to Rs.5,33,180 had he stayed fully invested.
For staying invested, the absolute return is 533%. For missing best ten days, the absolute return is 250%. Missing just best ten days costing you a difference of 283%! Can you believe it?
An amount of Rs.1,00,000 invested eleven years before in Sensex is worth following:
Remain Invested â Rs.5,33,180 (16.43% CAGR)
Missed best 10 days â Rs.2,50,270 (8.69% CAGR)
Missed best 20 days- Rs.1,47,330 (3.58% CAGR)
Missed best 30 days- Rs.93,490 (Negative returns)
Missed best 40 days â Rs.63,440 (Negative returns)
The cost of missing best 10 days is Rs.2,82,910 (roughly 3 times your capital) where as cost of missing best 40 days is Rs.4,69,320 (4.7 times your capital).
Infact your capital would have got significantly eroded if youâve missed the best 30 and 40 days.
For missing just best 20 days, you would have merely received closer to savings bank interest.
Tell me honestly, in hindsight, how many of us would have been able to predict the best 10 days during the last 10 years leave alone predicting the best 40 days?
Markets can gain or lose even 10% in a single day.
The myth is that, timing is essential to generate high returns.
The Reality is that, it is the time and not the timing that matters
**It is the time (duration) which matters in an equity market of one of the fastest growing economies in the world and timing does not matter. Our economy is expected to grow phenomenally in the decades to come. If someone is capable of making lumpsum investment and not worry for atleast 10 years, he would be amply rewarded.
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More at http://wisewealthadvisors.com/time-or-timing/
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