**Suparna Pathak:**

**Saibal Biswas:**

**Suparna Pathak:**if you explain this a little more clearly…

**Saibal Biswas:**exactly.

**Suparna Pathak:**My next question is what is the role of age in the context of rise and fall in the market?

**Saibal Biswas:**One is, at a young age, one’s ability to take risks is much higher. At a young age, one has the strength of conviction that one can overcome the market swings. Second, what we have not discussed yet, is compounding. The most potent tool to beat inflation is compounding. As we have discussed in the past, the return in the equity market is higher, as is the risk, and volatility, which leads to the doubling of monies in the long term…

**Suparna Pathak:**this is becoming too complex … you are saying that as the market is volatile, if one invests when the market falls, one loses …

**Saibal Biswas:**till one actually sells out, one does not lose. It is an opportunity, if I buy more after one's investment and a subsequent fall, I can actually average down.

**Suparna Pathak:**that means, if one can stay invested for a long period, one can take the ups and the downs of the market in stride. Normally people say that the Indian markets have a 5-year cycle. Now suppose one remains invested for twenty years. And suppose both the up and the down cycles remain for five years. Then, if I hold on for twenty years, what is my benefit?

**Saibal Biswas:**The benefit is simple. If I buy a share or into a Mutual Fund when the market is going down, then when it goes up, then in a relatively short period of time, my money can be doubled. Now for the compounding – 2 becomes 4, four becomes 8, 8 becomes 16 – imagine how this can grow like an atom bomb, if one is able to give it sufficient time. Suppose somebody starts investing at 50 or at 40. Then by the time the 4 becomes 8 or the 8 becomes 16, the time runs out. But for someone who starts young, the time available may be 30 years – just imagine the number of times the money can be rolled and to what value it can be taken to.

**Suparna Pathak:**Another thing that we heard is that the share index which was at a certain level twenty years back, would be at a much higher level twenty years hence. This means that the growth in the index will also be reflected if one remains invested for a longer period. This means that like going uphill, taking the ups and the down into consideration, the incline is upwards…

**Saibal Biswas:**It is like the maths problems involving the monkey going up a greased pole… it goes up and down, but ultimately reaches the top. The same is true for investments in the stock market…

**Suparna Pathak:**I see you have done some calculations …. If you quickly explain this, please…

**Saibal Biswas:**This is about the example that I was giving. If one has a time period of seven years to buy a car. If one invests Rs 15000 every month then one’s total investment is Rs 12 lakhs. This will allow one to buy the desired car worth Rs 20 lakhs after 7 years. But if one starts after 2 years, then one will have only 5 years, which will call for a monthly investment of Rs 25,000. For going back two years one has to invest Rs 3 lakhs more to reach the same target.

**Suparna Pathak:**Consider this: If you start early, then. In the end, your gains will be much more. To sum up, the market is characterised by ups and downs, you have to be patient to enjoy the power of compounding. I mean, the fruits of patience are always bigger.

**Saibal Biswas:**Don’t forget to share. Awaiting your questions. Thank You.

**Takeaway**