Asset allocation will help contain losses


Fortunately, if you’re a long-term investor, there isn’t much to worry about. Experts suggest that investors should stay calm, value holdings, scale investments, and always stick to asset allocation.

Stay calm and assess: Watching the markets fall could be unsettling for most investors, especially those who went public in 2020 and beyond. But volatility is an inherent nature of stock markets.

“The correction is only natural, especially after such a phenomenal rise in the markets in recent months,” said Santosh Joseph, founder and managing partner of Germinate Investor Services, LLP.

Experts suggest that existing investors can continue to invest in the market.

“Investing behavior should not be influenced by market cycles,” said Vinay Ahuja, Executive Director of IIFL Wealth. He said the first thing investors need to do is be disciplined and calmly assess the portfolio. “If a stock’s price has fallen, assess whether it still has the potential for long-term growth. If so, then hang in there, ”he said.

Stagger your investment: Since it is not possible to time the market, experts say that new investments in stocks can be staggered. That is, instead of investing a lump sum in equity all at once, one can consider investing in the coming weeks or months.

Joseph said, “The simplest thing like stunning becomes the deepest strategy in a volatile market like this. Laddering helps remove risk from markets, he said.

Vinay suggests a phased approach for new equity investments. First, take a look at the list of potential investments. Then see if they are now available at better valuations and ask yourself if the growth is intact. If yes for all, then go ahead and start investing in them in a phased manner.

Stick to asset allocation: Asset allocation has been a proven method of containing losses in any market scenario, as it balances the risk and reward aspects of the portfolio. It is only a question of distributing the assets of a portfolio between the asset classes according to the objectives, the risk tolerance and the investment horizon of an individual.

Nitin Shanbhag, Head of Investment Products, Motilal Oswal Wealth, said: “It is important to stick to the asset allocation rather than being swayed by increased volatility in the short term, as even the previous bull market of 2003-07 saw several phases of corrections. “

He stressed that investors should consult their own investment charter to check whether the allocation of their investment portfolio is in line with their long-term objectives.

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