How to protect your investments when markets are volatile
- February 7, 2022
Preserve a healthy level of cash
In a volatile market, we believe that depending on the risk appetite and patience for investment duration, it is better to hold a higher cash position and only deploy money if you are a long-term investor.
Stay focussed on your long-term financial goals
Equities have the potential to provide long-term inflation-adjusted returns. It is necessary to take calculated risks based on individual risk appetite could deliver big returns in the long term. Investors should look to build a long-term super portfolio by accumulating quality stocks in current market weakness.
Re-assess portfolio allocation
The top-performing sectors change in every bull market. You should churn your portfolio from potential underperformers to relative outperformers in current market conditions. It’s important to stay invested in the right sector at the right time to get a strong outperforming portfolio.
Build false hopes
In a falling market, holding on to stocks that do not have strong fundamentals and waiting for your buying price to come could result in heavy losses. Also, do not tend to average your investment in weak stocks. If the price drops owing to fundamental reasons, it is better to exit and book losses.
Don’t call out the bottom
In any crisis, it would be futile to predict a bottom for the markets. They have also bounced back significantly offering handsome returns after every crisis.