New WealthTech data reinforces the case for long-term investing

By Milan Rojan

According to a new wealth conversations report, market corrections have remained a recurring characteristic of equity markets, with historical data showing that periods of volatility have frequently been followed by long-term growth.

The study has analysed decades of market data and found that temporary declines have occurred regularly, while equity markets have continued to generate growth over longer time horizons despite periods of heightened volatility.

The report has analysed historical market performance to examine how investors have navigated market declines, recoveries and wealth creation over extended periods. According to the findings, temporary declines of 10-20% have occurred frequently across market cycles, while larger corrections exceeding 20% have also appeared periodically as part of broader economic and market events.

FundsIndia’s analysis has suggested that investors who remained invested through periods of volatility have generally experienced positive long-term outcomes. The report has reviewed several major market downturns and found that, despite substantial short-term declines, equity markets have historically recovered and generated returns over longer investment horizons.

The research has also examined the performance of the Nifty 50 Total Return Index (TRI), finding that the index has doubled within six years in approximately three-quarters of observed periods. Only a small proportion of periods have required more than eight years for similar growth, highlighting the impact of long-term compounding on investment returns.

In addition, the report has explored the effect of market timing on portfolio performance. FundsIndia’s analysis has indicated that missing a limited number of the market’s strongest trading days has significantly reduced long-term returns. The findings have suggested that some of the market’s best-performing sessions have occurred close to periods of heightened volatility, making it difficult for investors to consistently predict entry and exit points.

The study has further compared the performance of equities against other asset classes and inflation over extended periods. According to FundsIndia, equities have historically delivered stronger long-term growth than several traditional investment alternatives, despite experiencing higher levels of short-term volatility.

Jiral Mehta, Senior Manager – Research, FundsIndia, said: “One of the biggest misconceptions among investors is that market corrections are exceptions. In reality, they are a recurring feature of wealth creation.”

He added that the analysis has shown that while short-term market movements remain unpredictable, long-term wealth creation has historically been supported by patience, asset allocation and remaining invested through market cycles.

FundsIndia said the report has been designed to help investors develop realistic expectations about market behaviour and better understand the relationship between volatility and long-term investment outcomes.