Let's take an example. If your goal is to provide towards your child’s education eight years later then you should invest in equity markets and expect a return of 12 to 13 per cent on an average. This is long term goal. Long term does not mean more than one year. In equity markets long term means at least 7-8 years. It is over this period that the volatility averages out without you worrying too much. If you have planned accordingly and invested for long term in the recent past then the current stock market volatility should not affect you much.
For individual who would like to take advantage of the ups and downs of the market it is best to start a systematic investment plan, SIP, in mutual funds. This will help you take advantage of the volatility in the market and also you do not have to time the market.
Photograph: STEPHANE DE SAKUTIN/AFP/Getty Images
Also see: Financial planning & you
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