It is universally accepted, sort of, that the one thing that each one of us most commonly thinks about is food. On a typical workday, once lunch is done with it, the most common question on a man's mind would be: “I wonder what my wife/mom/cook is going to make for dinner.” If you're the wife or mom or cook, the question on your mind would be: “I wonder what I should make for dinner.” A slight difference, but the same essence.
However, there are times when some other topic threatens this place of priority in our minds that is usually occupied by 'dinner plans'. These days, it's the election results. Depending on when you read this, the election results will be between 7-10 days away. This is the time when the stock markets tend to behave more erratically than your boss and your 2-year-old child combined. We've seen this in the past couple of months - the markets have run up to unprecedented highs. So, it is obvious that the question that every investor's mind begs to ask at this point is: “What should I do with my investments keeping the election results in mind?”
The answer, for most investors, is - Nothing. Just keep doing what you were doing anyway.
What? Really? But the markets are at an all-time high, shouldn't I book profits, you'd ask. Sure, if you're a speculative investor who understands how much to take out, go ahead. But the problem is that most of us are not speculative investors, even though we'd like to think we are. We're just common people who can't help but get seduced by the current trends. At present, it's the market's fate post the election results. We hear “experts” tell us that the markets will be euphoric if the BJP comes to power. Some others tell us that the markets could touch 25k by year-end. Historical data tells us that the market tends to crash when a new government comes to power. There are all kinds of speculations, but that's what they are - speculations. No one can be cent percent sure of how things will play out.
What we can be sure of is how our investment goals and objectives remain the same. If you're investing to buy a house after 5 years, you'll still buy that house whether the BJP comes to power this year or not. If you're investing for your daughter's wedding that will come after 20 years…does it matter who the country elects in 2014? Nope.
The government and the economic environment are not in our control. We vote for the politicians who we think will make things better, but even that vote doesn't assure us of anything. What is in our control is our investment goals. You know what you're investing for and you should continue investing for it. Don't let short-term trends like the elections affect your long-term investment vision. Don't stop your SIPs, especially if the markets tank. That could turn out to be a great buying opportunity. Book some profits if you want to if the markets go up, but don't withdraw your investments entirely. And of course, don't invest in lump sum. Timing the markets has never worked out for anyone.
Look at it this way - you don't know what your wife/mom/cook is going to make for dinner, but you're going to have it anyway. Similarly, you don't know which government will come to power, but you've to keep investing anyway.