- Posted by: Brighter Mind
- Category: Power of Compounding
Stock markets are volatile in nature. When there is good news all around and the investors encounter a bull rally, there is no problem at all. The share prices are growing, portfolio is fetching good returns and overall investor is satisfied with the performance of market.
But when the stock market tumbles, bad news is been injected into the market every now and then. This is the time when investors panic and are stressed. This bad news can spark anxiety, uncertainty, fear and triggers radical decisions among the investors. In such conditions investors feel to pull out their investments or change their investment horizon.
But pulling out your investments isn’t the strategy which an investor should adopt. It is really important to keep investment vision intact when the markets get choppy.
Below are the 5 strategy which can help you keep your investments on track when the market volatility strikes.
- Stay invested
The major reason investors panic is due to short term losses which can trigger anxiety. But letting the emotions drive the investment decision can be costlier for the investors. One thing investor should keep into mind is that the markets will be volatile in short term. Any bad news will come and go, but its impact on market will only be for short term.
Hence staying invested during the short term volatility is the best way to overcome daily bumps of the market. This can be difficult especially when the markets are choppy, but this can create a good opportunity to build wealth.
- Diversify your portfolio
Diversification is the key to investing. There is a famous phrase – ‘Never put all your eggs in one basket.’ This means that when you build your portfolio, you should not invest all your money in one company. It is the best practice to invest your money in the diversified basket basis different companies, industries and business size.
Diversification protects the investments from the market volatility as the negative returns of any stock can be offset by the positive return of the other stock. Diversification offers the great opportunity to fetch handsome returns by minimising the risk of your portfolio.
- Hold long term vision
A sudden drop in portfolio value due to market volatility can have dramatic emotional rush in the investors. What’s important is that investor should understand that this drop in investment value is for short term and will not be impactful in the longer term.
Investor should always hold the long term prospective about his investments. Volatility may impact your investment returns for the shorter term. But when these investments in valuable companies are held for the longer term, they can create a good wealth for you. This is because, risk is minimal in stock investments when they are held over a longer period of time, provided these investments are done in quality companies.
- Don’t track your portfolio on daily basis
When you watch your portfolio on daily basis, the chances of making wrong investment decisions increase. This is because, when the market corrects in short term, panic kicks in and investor tending to sell off some investments in order to book the profit or even partial loss in fear of extended losses.
Hence it is advised to not track portfolio on daily basis. Instead checking the portfolio once a while to keep track of your investments is healthy.
- Talk to your investment advisor
If you still feeling confused and fearful about market volatility, you should consult the investment advisor for guidance. They are the expert in this field and can provide you professional advice and help you determine the next steps on your investments. Hence you should always seek expert help and don’t rush for any investment decision basis on market volatility.
Brighter Mind is a true SEBI Registered Investment Advisor for you and offer best portfolio management services to the investors. We guide our investors on every step in the market and help them take a wise decision in market volatility. Not feeling prey to the choppy market is the best way to create wealth over longer term.
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