Timing the Market vs Time in the Market: Which One Is More Effective?

As the Indian stock markets touch an all-time high it leads to a dilemma whether to book profits or safeguard the gains. What steps should you take in such times? Should you try to time the market to book profits or follow the time in the market and stay invested?

To find the answer you should first understand why the value of stocks rises. The first reason for the price of any asset to rise is that there is more demand than supply.

Mutual fund investment | Image Credits: appreciatewealth.com

Stocks allow investors to own a part of a company. The main aim of the company is to earn more profits for their shareholders. As the company continues to increase its earnings the stock market will continue to move up.

Timing the market and time spent

It is well understood that as the companies continue to earn it helps to propel the stock market over some time. But this does not convince anyone and most people are not comfortable investing at such highs and wait for a correction.

Should you wait for a correction or start to book profits when the stock market hits a high? The stock market reaches an all-time high frequently because of the various thriving companies.

Suppose you invest when the market is at an all-time high. Once you buy investments you will not sell them quickly. However, the investors who currently see an all-time high are not seeing that. The time you spend in the stock market is more important than timing the market.

To invest for the long term you can try Mutual fund investment through an SIP. Appreciate offers an app that allows you to start an SIP online.