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Lagey Raho

The current times might seem pessimistic, but they're ideal to lay the foundation for great long-term returns from equity...

It's bad news time once more. Around the globe, investors are running scared. Europe is well past the stage when the phrase 'Greek tragedy' qualified as a pun. Now, the phrase of the moment is 'Europe's Lehman moment'. Here in the US, where I'm travelling at the moment, the newspapers and news channels are full of the government's impending budget crisis. Even the tabloid-ish papers have front page stories about how the government will shut down on August 5 and about America's mountain of debt.

In India, the stock markets seem to have settled into a pessimistic mood. There are the occasional bright days, but in general bad news of all kind has created a miasma which doesn't seem to be anywhere close to clearing. It's just the kind of time when the whole idea of investing, specially investing in equity for the long term loses any urgency. You don't get the feeling that you'll be missing a bus by not starting fresh investments now. No great gains appear to be possible and therefore no great opportunity loss will take place if you don't investment. So that equity SIP that you could have signed up for will probably go unstarted till you can feel some excitement of making money in your bones.

Unfortunately, for those who are saving and investing for the long-term, this would be downright dangerous frame of mind. This is exactly the kind of time in which you can lay the foundations of great long-term returns. Mainstream equities are stagnant, with frequent bursts of pessimism that drive prices down. An year or two of monthly equity SIPs in this supposedly uninspiring market and you would have built up a sizable chunk of equity holdings that have been acquired at a relatively low average cost.

For the thinking saver, these are actually very exciting times, the sort when you can quietly lay the foundation of your future fortune. As the chewing gum ads used to say, 'lagey raho'.