Volatility is a function of uncertainty. Financial markets do not like a phase in which predicting the future becomes difficult. It increases the diversity of views within days and induces volatility. Decisions to buy or sell an asset and to manage portfolio risk become difficult. If you are a relatively new investor, you stop your regular systematic investments as you are not aware of the cyclical nature of the markets.
Companies in wealth management, such as mutual funds, are reporting a resilient trend among Indian investors in their latest quarterly analyst calls. Despite a recent sharp selloff in the Nifty 50, systematic investment plans continue to gather momentum in March 2026.
There is a lot of noise about systematic investment plans (SIPs). However, the average holding period is less than four years for two-thirds of the investors. That means most of you who invest in various asset classes through mutual funds withdraw the money quickly, depriving it of the chance to grow.
The Securities and Exchange Board of India conducted an investor survey in 2025 and published it earlier this year. The stock market regulator found that as awareness of financial products increases, penetration rises. More than half of the households in India are aware of mutual funds. However, only 6.8% of them actually invest. Awareness of the stock market is around 50%, but only 5.3% of households invest in equity shares. There is very little awareness of other financial assets such as corporate bonds, real estate investment trusts, Infrastructure Investment Trusts, and alternative investment funds.
There is a hesitation about execution despite relatively high awareness about mutual funds and stocks. There is a fear of loss.
Getting over fear
While investing directly in the stock market is meant for those willing to learn and dedicate time to research, analysis and reading, mutual funds are a simpler way to allocate investible money towards future financial goals.
An underlying factor is that there is no short-term solution to wealth creation. Many of you are aware, but a large segment of the Indian population is not. You need to give your money adequate time to grow. Investing in equities for four years or less does not create wealth.
Charlie Munger, the prodigious partner of American investment legend Warren Buffett, said that the big money is never in buying or selling. It is in the waiting. Patience is a significant virtue. Many pundits also argue that it is a risk-management tool.
When it comes to index fund, exchange-traded fund, or mutual fund investing, you are transferring the risk of market timing to the funds. You make money usually when you buy low and sell high. The decision to arrive at the right price for an asset requires you to be on top of the information cycle. You need to understand the difference between value and price. A share that trades at a high price need not be expensive due to a low free float or non-promoter holding. It could be priced high because the company makes money on a very low equity capital base. Similarly, a low share price does not mean the stock is cheap. Fund managers, who manage your mutual fund money, have access to the sophisticated data that you as an individual cannot access.
If you are confused about all of that, you need to engage a professional advisor. This person cannot be your relative. You need some dispassionate advice. Using artificial intelligence is a good starting point, but you cannot rely on it to buy or sell. Making an appropriate asset allocation and staying invested are the only ways to successful equity investing. Eventually, as Warren Buffett has said and proved time and again, the stock market is an efficient mechanism for transferring wealth from the impatient to the patient.
