Equity investments: Is it better to stay invested without booking profits for a long-term investment strategy? If you have a query, mail it to us right away
What’s the best approach when markets are at their peak with high valuations? I don’t need the money immediately. Should I shift some investments to liquid funds, balanced hybrid, or aggressive hybrid funds, or redeem and hold the money in my bank account? Alternatively, for a long-term strategy, is it better to stay invested without booking profits? My mutual funds have a tenure of 5–7 years.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
ET Year-end Special Reads
Buying a home in 2025? Here's how property market can shape up
18 top stock picks for 2025 from 6 leading brokers
Five big bangs that shook the corporate world in 2024
Sumit Duseja, Co-Founder & CEO, Truemind Capital (Sebi-registered Investment Adviser): Valuations play a significant role in the outcome of returns in the long term. There have been periods of many years when the stock markets have delivered negative to zero returns because the base was very expensive. Timing the markets is next to impossible. To generate consistent returns over the long term with lesser volatility, one needs to follow a strategy of dynamic asset allocation. In this strategy, you can prepare an allocation table for equity, debt and gold across market valuation (for example, Nifty PE ratio). When the Nifty PE ratio is higher than the long-term average of 20-21x, you can reduce equity allocation by a few percentage points at decent intervals. Similarly, when the PE ratios are lower than the long-term average, you can increase equity allocation. Ensure that the changes in allocation are not very frequent and are done on significant changes in valuations to minimise taxes and reduce hassles. Following this strategy could be tricky for a normal investor. Therefore, one can also consider multi-asset or dynamic asset allocation funds, where fund managers take a call on changing the allocation among equity, debt and gold.
I would like to invest Rs 30,000 every month in mutual funds. Could you recommend some safe options for this investment?
Manish Kothari, Co-founder & CEO, ZFunds: Mutual funds offer a wide gamut of products that are suitable for your financial needs and also take into account your risk appetite. If you are a first-time investor and looking for safe options, I would suggest you start with balanced advantage and multi-asset allocation funds. You may consider Edelweiss Balanced Advantage Fund and ICICI Prudential Balanced Advantage Fund. In the multi-asset allocation funds, you can consider Bandhan Multi Asset Allocation Fund and ICICI Prudential Multi Asset Fund. These funds have lower exposure to equity and, hence, carry a lower risk than pure equity funds. Historically, they have delivered a higher return than fixed-income investments over longer investment periods. Ideally, you should invest for at least five years as this will help deliver better risk-adjusted returns.
Ask our experts
Have a question for the experts? [email protected]
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
This story originally appeared on: India Times - Author:Faqs of Insurances
