Place your hand on your heart and ask yourself, have you really made money? Are you happy with the way your investments have performed? Was something missing? Could things have been better?

The stock markets are down about 25% from the peak levels they touched in mid-May. People lose money and sometimes a lot of money.

This shakes confidence. Just a couple of months back, every expert on stock market investments was shouting from the top of the roof, that India is on a growth trajectory not witnessed before in our history. India is a growing economy and that every statistic available to us, signals more growth and positive development in years to come.

But suddenly, the tide turned and the stock market crashed and now the experts are giving us reasons as to why the stock market fell.

As a result, people feel cheated. They lose confidence in the stock market and start believing that the stock market is like a gambling den and it is a place, where you lose money. Hence they decide to cut losses and cash out from the stock market.

There is obviously something wrong somewhere. Either the experts were wrong or your investment decisions went wrong somewhere down the line. However, the funny thing is nothing is wrong here.

If there is something that is wrong, it is our planning or rather the lack of planning. There is a method to deploying funds into the equity markets. If you follow this method you just cannot go wrong. Here is the method:

One fundamental assumption, always to be kept at the back of your mind is that 'equity investments are assets that will generate the maximum returns over a fairly long period of time.' If you trust this, you will not go wrong, that is certain.

Volatility is just part and parcel of investing in the equity market. 20%-30% volatility is implicit for equity investment at any time. If you cannot stomach this, then you should not even look at the stock market. If you do not like the rules of this game, then obviously you should not play it.

Once, you've decided to play the game, then here is a method on how to deploy your funds:

1. What is your surplus? How much can you save from your gross earning after deducting all expenses, i.e. your taxes, loan installments and all living expenses? If it is above 20%, it is good. 20% is a minimum and if you cannot meet this, you must take serious note and reassess your expenses.

2. From this amount, deduct the amount you require for meeting your basic financial requirements like insurance, medical contingencies, etc.

3. The balance amount is what is available for managing long-term, medium-term and short-term financial goals. For short-term goals, i.e. for goals of less than 3-4 years, it would not be wise to commit any money to the stock market.

4. For goals beyond 4-5 years, you may use equity investments. What you need to control here is your greed and expectations of the future. Expect no more than a return of 12% to 15% or so per annum, but remember you many not get this each year.

However, if you were to look at your portfolio after 5 to 7 years, you will see that on an average your wealth has grown by 15% or so.

In reality, you may land up getting much more as well. What you must not forget is that you must invest with discipline. You can choose to invest in equity mutual funds or shares as you like. For shares, you have to be sure that you have done extensive research.

5. Finally, how you actually place your investments is also important. A systematic investment plan, SIP, of investing directly into equity mutual funds may be a great idea but is not foolproof. In the intermediate, you could lose significantly in SIP also. Ask your advisor/broker to help you do a bit of asset allocation and thereby risk management.

That is all there is to it. It is not like learning rocket science. It is just simple financial discipline. Forget about IPOs, fancy derivative strategies, futures, options, arbitrage etc. . . all these big words are nothing but trading instruments and trading is a zero-sum game. This essentially makes your broker and advisor, far richer than you will ever be.

Here is a figure to chew over: Just Rs 10,000 invested per month for 20 years that earns 12% returns can easily give you your first crore! It's really so simple.

Kartik Jhaveri, an expert at Financial Planning, is a Certified Financial Planner and a Chartered Wealth Manager. He may be reached at kartik@transcend-india.com.

Disclaimer: The contents of the above articles are the intellectual property and copyright of the author, Kartik Jhaveri. No part may be used or reproduced in any form or manner. This article is purely educative and you are strongly advised to consult an expert prior to taking any significant decision. If you choose to act upon the information contained in the above article it is at your own risk.