Long-Term Financial Independence in Equity Market

  • Dec 15, 2018 AEDT
  • Team Kalkine
Long-Term Financial Independence in Equity Market

It requires sound economic analysis, thorough fundamental research of stock’s past and recent performance, and prudent analysis business performance to reap the long-term benefits of investing in stock market. Anticipating future growth prospects and prudent market understanding is another important aspect to achieve stable financial independence.  In such a scenario, regular income streams through long term investments or short-term punting for growth become important for many investors.

Market sentiments are influenced by majority of factors such as key global policy change and macro-economic development. Factors such as changes in regulatory policy/framework, Central Bank’s monetary policy and Government’s fiscal measures tend to impact investor sentiments thereby causing frequent ups and downs in equity market. Economic forecasts or release of economic data pertaining to current account, GDP growth rate, industrial output or inflation also drive movements in the market.

It is very important to have the financial knowledge and discipline to undertake stock buy/hold/sell decisions given the volatile nature of fluctuating stock market. Investors must take into consideration business financial results pertaining to earnings and profits, dividend announcement, management change, share placement, merger/acquisition announcement and any other major business announcement while undertaking investment decisions.

One must adopt robust stock selection techniques based on careful analysis of Earning per Share ratio, market capitalization, Price- Earning Ratio, Price-Book Ratio and other related financial ratios/metrics.

It is always a wise strategy to invest funds after proper scrutiny of surplus funds, financial strength and retirement goals. Instead of picking just one stock, one must aim at diversified investment across sectors/industries to reduce the risk of loss.

To reap short term financial gains in the equity market, investors should avoid beating the crowd and follow already known strategy/stock tip. One should focus on financial goals and own research before taking any buy/sell decision. It is not advisable to invest in stock market based on the temporary opportunity without considering the long-term outlook. Instead of chasing a hot tip, one should perform in-depth research before putting in hard-earned money.

It is extremely important for investors to act intelligently in order to achieve financial independence and enjoy significant gains in long term. They can even take professional guidance from experience financial advisors with track-record of prudent investment advisory and equity market investment knowledge.

Although the recent Russell Investment report throws not so impressive performance of Australian equity market in past decade, offering only 4% returns to investors. However, rational and sound equity investment still offers ample scope to wealth creation and financial gains.

Market experts anticipate collapse in much hyped Australian property bubble. House prices are already tumbling down in Sydney and Melbourne. Household sector is burdened with extremely low savings and high personal debt. Any upward revision in interest rates (not changed since long) will lead to series of defaults, severely crumbling nations’s financial sector and thereby sluggish growth prospect.

One cannot forget how ASX stayed strong even at times of global meltdown during 2008 GFC which saw stock markets tumbling down for major world economies.  All in all, achieving financial independence through prudent stock market investment holds great future.


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