Don't try & time the market! Missing out on 10 good days can pull down your return from 509% to 296%

"Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves,” says Peter Lynch, one of the well-known and most successful investors of all time. The idea is to stay invested and do not time the market is what Lynch meant when he made this statement on investors trying to wait for one redefining moment that they think can shape their portfolio. Besides, consistency is one thing that can pay rich dividend over a longer period of time.  

This was apparently validated by a report shared by Sharekhan, one of the leading broking houses. As per the report, timing, consistency and staying invested is the key to create wealth. The report also highlights that missing out on a few days can cost you dearly as far as expected return is concerned over a specified period of time in the future.  

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In an index,  Sharekhan research shows that an investment value of Rs 10 lakh could have grown to more than Rs 60 lakh over the span of 10 years. However, had you skipped '10 best days' it could have hurt your return significantly.  

Source: Sharekhan Research

Sharekhan, through an index, highlights how just missing out on 50 'good' days could have pulled down your portfolio return by 18 per cent in a period of 10 years. "If you miss even a few of the best days, it can significantly impact returns on your portfolio," says Sharekhan report.

As per Sharekhan research, missing out on just 10 days could even have cut down your return by half.  

"Portfolio value would have reduced to half i.e Rs 30.9 lakh instead of RS 60.9 lakh if investor missed out on 10 best days in an attempt to time the market," shows the Sharekhan research index spanning over a 10-year time staring on January 2019.  

Having said all that, the research emphasises that it is important that you make the right selection of stocks when it comes to staying invested for longer period of time. " Quality of stocks does matter. Staying invested in low-quality stocks, based on speculative event-based stories, momentum stocks could actually hurt your portfolio," the research underlines.  

There will be always concern with volatility in the market, but despite everything, equity gives healthy return better than any other asset classes.  

For an example, a fixed deposit of Rs 10 lakh made for the same duration (10 years) at 6.5 per cent interest rate would fetch Rs 19,05,959. The estimated return for this product is Rs 9,05, 559, short of even 100 per cent growth against 509% in case of equity, having followed all criteria of the research.  

Source: Groww FD calculator 

As per the research, one should not be afraid of investing at peaks, as the right selection of stocks could even make it a profitable deal. "While investing at peak don't panic, stay invested as it could make double digit return over medium to long term"  

Source: Sharekhan Research

The research identified six occasions of buying close to the market peak, but still returns were higher than 10-12% CAGR over medium to long-term.