In January this year, the Sensex rose 10.68% compared to December last year and, then, became volatile. In May, it fell over 6%, but recovered with an year-to-date return till September-end at a staggering 20.78%. This oscillation in the equity market would make anyone apprehensive.

If you take a 12-month period beginning September 2011, the return is 10.61%; and if you take a 21-month period starting January 2011, it is 2.4%. So, with this return analysis, where do you stand? Is it all about ?timing the market? or ?time in the market??

Economic moves: Investment decisions are made in real time. You do not drive with a rear-view approach. You drive looking forward. So, the statistics that one looks at is the past performance. Typically, you look at the returns generated and, then, with your ?eyes open?, you invest in a financial product. Now, what looks attractive today need not be tomorrow. As in life, the ?devil? lies in the detail.

The announcement of QE3 by the Federal Reserve (which over a period of time could lead to higher inflationary pressures) and the political will displayed on the economic front by the government have changed the market perception. We find a positive enthusiasm and perception in the equity market. Moreover, banks have reduced interest rates as well as the lending rate, the latter actually meant to boost consumption. With the current demography, the consumption growth will continue and this is why Indian markets are attracting investments.

Investment methodology: With all asset classes generating healthy returns in the last quarter, is it time to be bullish? The answer lies not with the market, but with you, the investor. Greed begets gain or loss, based on your luck (or market timing, if you want to say that). Fear begets uncertainty and missed opportunities. We all are happy with a secular income and cash flow. But volatility is the new normal. And sooner we accept it, better it is for all investors.

The suggested approach ? goal-based investing

Before you invest, have a goal (do not let any advisor or friend talk to you about the return, instead ask what the risk is). Decide on a time horizon, investing period and expected returns. Then, choose the asset class. Choose one that understand. Make an effort to understand. After all, it?s your money and you know the best. You will be the Arjuna, who will decide on the final investment decision.

Consider the impact of inflation in your return. The return that needs to be considered is the ?real return? ? the return after inflation. An systematic investment plan (SIP) initiated in March 2011 (Sensex levels: 17,823) ? till September 2012 (Sensex levels: 18,762), a period of 19 months, in a large-cap diversified funds, has generated an annualised yield in excess of 12%, whereas the absolute return of the Sensex for the same period is little over 5% (annualised yield of 3.32%). And, this return is after taking into account the volatility experienced over the last six quarters.

This also indicates that you need to have patience in the instruments you choose and, at the same time, allow instruments to grow with you. Your wealth creation or destruction will depend on the investment choices you make.

There is no quick way to create wealth, but there is an easy process to create wealth, which is goal-based investing. At the end of the day, investing is a process and if you get the process right, your wealth will also grow.

The writer is founder and managing partner of Zeus WealthWays LLP