Why the stock market is good. And bad !

One quick at the picture below tells you exactly why the markets are a great way to make money. But then another glance tells you why they are a great way to lose money too !!!

The picture shows that the one sure shot way to make money is not to panic when the markets turn bad. Time, time and more time is the only way the markets make money for you. If you had entered the market in 1999 and then exited sometime in 2003, you could conceivably argue that you lost a lot of money even after being invested for 5 years. But if the same person entered the markets two years earlier or exited two years later, there was a lot of money to be made.

Moral of the story ? If you want to make money in investments, follow these simple and time tested rules :

1. Start investing early in your career. I cannot stress this enough.

2. Investing is a long-term proposition. Its not for the people who look at the charts everyday and perspire based on how it is moving.

3. Don't let your emotions overpower your sense of reason. Markers are inherently volatile and that is the reason they are good in the long term.

4. The most important point that you can make out by looking at the chart. It is not the "market timing" but time in the market that matters. No one know how the markets will move, so do not try to time your entry and exits. Stay invested for long periods and you will reap rewards.

5. Investing is a complex exercise only because we insist on making it so. Its actually very simple if you understand what you want and reset your expectations.