Why you should avoid making drastic changes to your investment portfolio during market volatility The market volatility is a reminder to review your investments regularly and ensure that you have a well-diversified portfolio
Arijit Verma, 50, has built a diverse investment portfolio, including property, jewellery, deposits and equities, to secure his family’s financial future. His equity investments are meant for his retirement, which is 15 years away, but market volatility has shaken his confidence. He wants to know if he should stay invested in equities or shift to more stable assets like debt funds and real estate.#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;} Long-term investors like Arijit Verma must stay calm during market volatility. Drastic portfolio changes could impact his wealth as timing exits and re-entries is challenging. He invested with a clear plan, understanding equity risks and long-term rewards. Equities remain his best bet to meet retirement goals. Exiting now out of panic could cost him in three ways: missing opportunities to buy at lower prices, being absent during market recoveries, and reinvesting at lower returns.
A better approach for Verma would be to pause fresh investments in equity rather than exiting altogether. For instance, if his portfolio had 50% allocated to equities, as the market declines, his equity exposure will naturally reduce, while the funds he redirects into debt instruments will help rebalance his portfolio, reducing equity exposure below 50%. The downside to this strategy is missing the opportunity to buy at lower prices, a difficult, but crucial, call for investors. Staying invested during a falling market is often the hardest decision, especially when portfolio values continue to drop, testing an investor’s patience and confidence.
Equity markets are subject to cycles of volatility. The market volatility is a reminder for Verma to review his investments regularly and ensure he has a well-diversified portfolio. It may be natural to react emotionally, but by working to a plan, he can make volatility work favourably for him.
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
#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
