You have invested in the stock market, hoping for good returns, but suddenly, news breaks, and the markets start fluctuating. You begin to worry about your hard-earned money, questioning if you made the right choices. Market volatility can be unsettling, especially when you’re unsure how to react. But it doesn’t have to be. With the right strategies, you can protect yourself from volatility and ensure your investments remain secure, regardless of market conditions.
Here’s a quick round-up of these safety precautions that can protect you from market ups and downs.
Investing in equity and equity-based assets is a great way to beat inflation. However, putting all your eggs in one basket is never a good idea. Therefore, you should maintain a mix of different assets in your investment portfolio. This will help protect your investments during times of uncertainty.
With a diversified mix of stocks, you can cushion the impact of volatility. Since most of us are ill-equipped to handle a large portfolio directly, an actively managed equity mutual fund is ideal. Investing in debt instruments is also a good idea as they generate fixed returns, no matter the market sentiment.
Once you are clearly in the equity markets for the long haul, you don’t need to worry much about short-term fluctuations. If we go by historical data, having a holding period over 5 years can help you tide over market corrections.
A SIP spreads your investment across both the highs and lows of market cycles. This means you purchase more units when prices are low during market downturns and fewer units when prices rise. By doing so, you effectively average out the cost of your investment over time. This strategy not only helps mitigate the impact of price fluctuations but also shields your investment from market volatility, offering a more stable approach to wealth building.
Maintaining the right temperament is crucial when investing during periods of market volatility. Here are some tips to help you stay calm and composed:
Timing the market is difficult, and market forces are beyond your control. That’s why it’s important to stick to your investment strategy, manage your emotions, and be prepared to hold onto your investments through market fluctuations.
While market volatility is a concern, it also presents new investment opportunities. Investing through Mutual Funds with an Investment Services Account allows you to take advantage of these opportunities as they arise. Log in to your NetBanking, navigate to the Mutual Funds section, and request to open a Mutual Funds ISA Account.
Click here to open your ISA today!
Did you know you can also have a cheat day when it comes to investing? Click here to read more!
*Terms and conditions apply. HDFC Bank is an AMFI Registered Mutual Fund Distributor. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.