InvestorQ : Is there any right time to invest in ETF and index funds?
Kunal Verma made post

Is there any right time to invest in ETF and index funds?

Swapnil Sarang answered.
4 months ago

I don’t think “timing the market” is the right way to approach investing in ETFs/index funds. According to me, “time in the market” is more important than “timing the market”. Index funds /ETFs are investment instruments that can only be truly appreciated when you look at them from a long-term perspective. If you look at anything on a daily or monthly or even yearly basis, it is bound to be volatile.

Volatility is the nature of equity markets. But as your lens turns to a 5-yr or above perspective, the volatility seems a bit less sharp and losses tend to be capped. Entry points are important and the timing of those are also in some sense crucial, but that is not a sure-shot way of achieving success.

So, the simpler and in many, a sense better way to approach investing in the equity market in general, is to take out time to do your own homework and build knowledge about the avenues. Both avenues of investing take advantage of the power of compounding and cost averaging, which grows your wealth exponentially. Invest in a good index fund via the SIP route (Systematic Investment Plan).

Over the long run, this will help in averaging costs as you will get more units when the market is low and fewer units when the market is high. Stock markets will always be volatile, that’s the nature of the beast. Don’t get rattled by daily ups and downs and always look at the big picture.