The path to the right portfolio is only through the right investment advice. If you are worried about the behavior of the stock market in recent weeks, here are a few thoughts that will help you feel more comfortable and provide additional information for making decisions.
First, create an airbag (money enough to spend for 3-6 months), separate it from the main investment, and invest it conservatively (in a deposit or safe bonds). It will help you feel more confident in any market situation.
Second, you don’t have to, and in most cases don’t need to, invest 100% of your money in stocks. Cash and bonds may be an acceptable choice for “sleep at night.” You can invest 80% or 60% or even less money in stocks and be sure that in the long run, you will get an acceptable result with less stress.
Thirdly, you should not limit yourself to the domestic market only. Although it has the potential to deliver good returns in the future, there are other markets that have simply fallen in price due to recent events that are a wise choice, also in terms of currency diversification.
Additional diversification with foreign bonds and/or real assets such as real estate and commodities has historically reduced overall investment and drawdown risk. This does not guarantee protection, but it certainly helps reduce risk.
Fourth, you can add alternative investments. Incorporating some active strategies into a portfolio, such as trend-following strategies, can help mitigate stock risk.
How to act in specific situations
1) If you are not investing yet
Now is not the worst time to start. Dividend and quality stocks can be a good choice in the current situation. You can choose the right stocks and financial products using the services of RKFS.
2) If you are investing and you have free money
You don’t have to be in a big hurry. Invest a little each month if you haven’t already. Now is also a good time for those who care more about periodic cash income than the current value of shares.
3) If you have the “right” portfolio
By “correct” we mean a diversified portfolio of stocks and bonds, formed according to your investment profile.
If you have such a portfolio, then you should feel quite comfortable and move towards the goal as planned – your investment horizon and asset allocation allow you to do this. Advice – do nothing.
4) If you have a “slightly wrong” portfolio
If your portfolio is not diversified enough or some of the instruments you have invested in are too expensive, take action to improve it. Lower prices will allow you to buy quality assets at more attractive levels and save on taxes (which you still need to be careful about). Invest new money with a strategy to improve the quality of the portfolio.
5) If you have the “wrong portfolio”
If you have a large position in one stock or 100% of your holdings in stocks, you must be probably a little disappointed by the sharp decline in the market in recent weeks.
Look back, if you hold good paper and you bought it a long time ago, you probably already made good money (and suffered even deeper drawdowns, for which you were rewarded). Now what you can do is to start diversifying your stock portfolio.
In order to get more specific financial advice based on your profile, it will be best for you to consult financial services companies in Delhi. For more info on investments and financial services and solutions, call us at +91-011-48564444 or email us at firstname.lastname@example.org