Should you start building your long term Portfolio right now?

Indian economy is in very bad shape now. Government is totally failed to revive our economy. GDP growth rate is hovering around 5%-6% which is much lower than we saw during 2004-2008 period. Major concern is Rupee depreciation and very high current account deficit. Rupee is at its life time low and theres no signal to bounce back immediately. RBI has already taken several steps so that rupee can bounce back. But results are limited. Rather it adversely affect banking industry. Maximum PSU banks are trading at their 52-week low-level. Private banks are also hammered heavily. Rupee depreciation will also make Petrol and diesel costlier.So, be ready to pay more for your household expenses. FIIs are also pulling money from Indian Market.Many retail investors are planning to sell their stocks from their long term portfolio.  So called defensive sector FMCG is also participated in this show. FMCG major ITC, HUL are also falling rapidly during the last few weeks.Only gainers are IT and Pharma because they are major beneficiary from rupee depreciation.(due to significant export income)

Retail participation in stock market is also at its lowest level.Many investors are planning to sell their stocks from their long term portfolio and park their fund in Fixed deposit. But before leaving from stock market right now ask yourself the following questions -

1. Is it possible that FIIs will continue to pull their money from Indian market for the next 2-3 years?
2. Is it possible that stock market will continue its downward journey for the next 2-3 years?
3. Is it possible that Indian economy will deteriorate continuously from this level for the next few years?

Answers of all those questions is a big NO. Now coming back to the next point if you exit from stocks and park your fund to fixed deposit then what will happen?

Is it better choice to exit from stocks and park that fund in Fixed Deposit right now?

In India, bank fixed deposit rate is hovering around 7.5%-9% per annum. Senior citizen will get 0.5% extra. So,100 rupees will become at max 110 rupees in fixed deposit. Now consider inflation. Officially inflation rate is hovering around 7%-8% in India. But calculate your household expense per month. You will find if it requires Rs-100 to cover your household expense right now then after 1 year that same expense will shoot up to Rs-110-112. Approx 10% to 12% increase annually. You may take help of back calculation. Calculate how much it was cost for your lunch/dinner 1 year back and how much it costs today. You will find why I am saying 10%-12% increase due to inflation. Now,if your fixed deposit earn 7.5% to 9% (max 10%) annually, then you will end up with negative return. (Fixed deposit is not Tax-free. In this calculation I also removed Tax rate)

Only Proven way :- Pick Fundamentally Strong Stocks at bad time.

It is historically proven that Stock Market is the only way to beat inflation. Only your long term portfolio in stocks can earn above inflation return. Right now there is panic selling in stock market. Although such panic selling is not a new situation. We had witnessed several such situation earlier. I am sure such situation will also come in future. History tells those who picks fundamentally strong stocks in such panic driven market, ends up with up to 50% annual gain. 

Here is a catch dont think that any stock(irrespective of fundamentals) can beat inflation in long run. Picking a fundamentally strong stock is not an easy task. If that was so easy then every investors will end up with huge gain from stock market.

Many of my subscribers are asking where is nifty headed in coming days? or how much downside is left in nifty from this level? My answer is nobody in this world can predict perfectly whether in the coming 4-5 trading session Nifty will fall 100 points or not. But I can assure you if you pick fundamentally strong stocks right now you will end up with huge gain after 1 year. So,dont waste your time to predict where Nifty or Sensex is headed. Rather invest your time to find bargain pick for your long term portfolio.

Always remember the worlds most successful Investor,Mr.Buffett, Be greedy when others are fearful and be fearful when others are greedy.

Best Time to build-up your long term portfolio-

I am saying repeatedly that this is the best time to build-up your long term portfolio. Remember stock selection and timing are the two most important thing in Stock Market.I had already sent several bargain picks to my paid members in form of Monthly Portfolio Allocation for their long term portfolio. Paid members can click here  to log-in to your dashboard to know more. Detailed guidance is not possible in Trial Membership. Click here to join in 4 Months Trial Membership.