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How To Safeguard Your Investments In A Volatile Market

BankBazaar.com logo BankBazaar.com 25-05-2019 Adhil Shetty
© AP

Markets across the globe have remained volatile owing to several global and domestic events. The growing concerns over the Sino-US trade war, the Brexit conundrum among other factors have impacted the global markets in recent days. On the domestic front, the markets touched new highs intraday as soon as the verdict of the general elections came out, but ended on a lower note.

While further volatility cannot be ruled out, you as an investor should tread cautiously on the investment path and not get carried away. In case you’re contemplating your next move amidst growing volatility, here are a few investment tips that you would do well to adhere to.

Review Your Investment Portfolio

Without compromising your long-term financial goals, review your investments and rebalance it accordingly. Ideally, your portfolio should have a balanced blend of both equity and debt assets. Your investment allocation should strictly be in line with your financial goals. And you’ll be well-advised not get overtly skewed towards equities over the recent upswings in the market – try to balance it out by using your equity profits to boost your investment allocation to debt instruments as well.

Do Not Deviate From Your Long-term Financial Goals

Do not get influenced by the stock markets volatility and alter your long-term financial goals. It is crucial to remain invested as per your financial goal rather than getting guided by the market movements. It is time to hold on to your long-term investments to get the best results, but still, be cautious of not parking all your money in the stock market. As discussed above, the approach should be to have a good mix of debt and equity instruments based on your income, age, financial goals, and risk profile.

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Diversify!

It would be a wise move to keep your investments diversified to absorb the volatility impact. Pick and choose your investment instruments carefully, if need be, take the advice of a financial expert to ride you through. Do factor in your income, age, risk appetite, and financial goals. A young individual can have higher exposure in the equity market over the debt market, but if you are close to retirement, keep debt investment as your choice to keep the risk factor under control.

Remain Invested In Systematic Investment Plans

Mutual fund SIPs provide the investor with an opportunity to channelize their money in a staggered and disciplined manner in equities.  SIP is one of the best tools that gives you the benefit of rupee cost averaging. If the markets are up, it’s a fact that you’ll get a lesser number of units; but then you should also consider that when the markets go down, you’ll get a higher number of units. As a result, SIPs ensure that despite volatility, you earn a good return.

Besides the above-discussed tips, review your risk appetite in the same manner you review your financial goals. Increase your exposure to equities only if your current financial commitments allow you to do so, else shift to safer options.

Finally, steer clear of rumours and fake news, instead, be patient and make informed decisions to reach your financial goals on time.

Also watch: Sensex jumps 400 points, Nifty above 11,750; bank stocks rally

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(Video provided by The Times of India)

The writer is CEO, Bankbazaar.com

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