Equities anyone? Part 2

Harish Rao has a scenario analysis, backed with data, on returns from equity mutual funds based on different entry points.

What are the lessons?:
1. Investing when the market is at the peak is profitable only when time is given for the market to recover and deliver.
2. Investing in a good mutual fund multiplies the returns. Look for MF schemes with a LONG TERM track-record (atleast 5 years +)
3. Investing when the market is down is the best recipe for long term success. (And the market is down over 55% from its peak).

What you need to do?
a. Define long term horizon. Ideal : 10 years. Acceptable : 5 years +
b. Assess your asset allocation. If you're underweight on equities, start buying it now.
c. Identify 3 superior equity mutual fund schemes : Start a Systematic Investment Plan (SIP). It is the ONLY way to benefit from volatility.
d. Get a grip on your emotions. If you are there for the long term, better see it through everything, irrespective of whether the following happens : failed monsoons, hung parliament, oil @ $ 150 or inflation @ 15%, terrorist strikes.
e. Get yourself an investment advisor, who is concerned more with your returns than his/her commissions.