We say that a market correction has happened when there is a decline of 10% or more in the price of individual shares/equities, currency markets and indices. Such corrections are believed to be curse by the investors who are new to the investment in market but someone who has spent good time in the market think the other way round.

When such correction happens, there is certain period of time (let’s call it Time Correction) for which the market movements leave investors in confused state where no one knows where it is heading towards. As a result of this, they take wrong decisions which hurt them for life time.

Just to explain this concept in detail, I have taken one live example of one mutual fund scheme. Mr. A who starts a SIP of 10,000 per month on 1^st Jan 2010. How he goes through different emotions during his investment journey of 12+ Years.

10th month – Finally I have made a good decision of starting SIP and I it satisfying to see that my money is growing

25th month – Oh!! Have I made a blunder by starting SIP? After 2 years, the value of my investment is even less than the amount I have invested.

45th month – It’s almost 4 years since I have started my SIP and gain is mere 3%. I was better of with my RD (Recurring Deposit) account. That would have given me much more than what I am getting here. I want to stop this SIP but Vishal is requesting me to be patient for some more time. Let’s see..

62nd month – Wow!!! What a wise decision I have taken by continuing my SIP. Gains of 140% which was 3% just a year and half back.

85th month – The gains from last 2 years are just about the same. Should I book the profit now? Btw, when I discussed this with Vishal, he asked if I have any goals for which I want to withdraw. And my answer to it is no. As per him such time corrections would happen multiple times during this investment journey. What we have to do is sit tight and keep increasing the base by adding more in such periods.

97th month – Oh Ho!!! My total gain stands at 282% 😊. Vishal was so right while asking me not to call it quits.

116th month – I know this is time correction and I want to continue with my investment. 😉

145th month – I cannot believe that the magic of compounding, rupee cost averaging and time corrections have helped me get to almost 400% gain.

151st month – The time correction is here again. This time I am going to top up my investment to make most of such correction😊.

All the period highlighted in red oval blocks are the time corrections which is a test of investor patience. But it definitely pays off if no wrong decision taken in such times. We have to remember that after every such red block, there was a green block which helped us for Wealth Creation. Obviously, it is not possible to predict the duration of such corrections but once who understood this will never make blunder of quitting market because of such corrections.

I strongly believe that Market Corrections are boon in our Wealth Creation journey and not curse.