The Global Financial Crisis and the COVID-19 pandemic were classic cases in point, where novice investors lost control of their emotions and lost out when the market crashed. A traditional passive investing strategy of ‘Buy and Hold’ can substantially impact an investor’s wealth creation process as it may fail to consider the effect of the time & value of money; especially if the entry and exit into stocks are timed at incorrect prices.
By following an active investment strategy!
An investor who follows an active investment strategy is well aware of the phases of the economic cycle, the sectors to invest in a particular economic phase, and investing in stocks in the right sector. With this approach the investor strives to enter & exit a stock at the right time. An active investor unlike a passive investor aims to avoid getting burned through capitulation at the wrong time.
We at Sharekhan Education are advocates of active investing. Active investing can not only improve your returns but has become a favorable choice among investors considering the narrowing difference between long-term and short-term capital gains tax in India.