Its time in the market and not timing the market which decides the fate of our investments

Couple of days back I met one of the fund managers of a big asset management company and we had an in-depth talk on the basics of investing.

The basic and the most important part of investing as per the discussion is the FV formulae.

FV = PV (1+r) ^t
Where
FV is the future value
PV is the Present value
r is the rate &
t is the time.

This formulae is very powerful and it suggests that if we are investing, the FV i.e. the future value is not in our hands as we might not get what is promised, the rate of return is also not in our hands as it depends on the product which we buy.

The time (t) and the PV ie the present value or the present amount which we have to invest is in our hands as we can decide how much and how long to invest. These are the only two variables which will decide the fate of our investments. Lot of people try to time the markets by observing the markets and trying to invest when markets are at the bottom and to sell when it is at the top. What people don’t understand here is nobody in this world will ever be able to tell how low is the bottom or how high is the top in the markets.

So let’s not time the markets and instead choose some fundamentally strong products and invest regularly for a long time.

Let’s invest regularly and stay invested whatever the markets levels are. We should remember and not forget strong fundamentals of our economy which is leading us to the said growth.