Investing in the market when stock market is at its all-time high can be tricky. Every informed investor waits for a downfall to re-enter the market. But what to do if market refuses to make a correction? And market doesn’t give you opportunity to restart investing. Wait! You never know where the market is heading the next moment. So, what should we do in the present scenario? Should you be a skeptic and wait for a correction or cheer up and invest right away?
The answer is- Waiting for the market correction to start investing would result in missing your goal. Looking at the long-term goal, you should start investing, even on the highs, as the market is only going to move higher in the long run. There may be a few hiccups on the way, but the general market trajectory is going to be largely upward-looking.
In case you are a novice investor, this time demands higher level of serenity from your end. And the best thing will be to contact your Financial Advisor.
Review your portfolio
Even in the high market, you may find a few schemes lagging behind. In such a situation, sticking to laggards might end you in losses. So, use this time to review your entire portfolio. Weed out the funds which don’t seem valuable anymore.
Re-balance the portfolio
If you have been investing since long, then this high market must have provided you good returns. But with this, the equity portion of your original asset allocation ratio of equity-debt might have increased. Higher equity means higher risk. So, it is high time to switch some of your profits to debt mutual funds.
You got it right! Your portfolio has now become riskier than you actually can digest. If you don’t want to carry a riskier portfolio, then it is better to re-balance it.
Start new SIPs
For first-time investors, trading in the stock market can be tricky. If that is not your cup of tea, then invest in equity mutual funds. Equity mutual funds give a similar kind of equity exposure but with more diversification and professional fund management.
Systematic Investment Plan (SIP) in equity funds, over a period provides the advantage of rupee-cost averaging.
Never invest in something you don’t understand
When markets are high, you may see a flood of NFOs and IPOs and that too with a strong hype all around. They may promise high returns, but don’t get lured before reading offer documents properly.
Generally speaking, an investment product with a history of 3 or more years should be considered. Even if you want to take the risk in NFO or IPO, don’t invest a hefty amount in a single stock or fund.
Ensure that you understand what you are getting into or contact your trusted Financial Advisor before investing.
Goal-based investing
Mapping a particular mutual fund to a particular goal will help you choose and track schemes in a better way. You can choose mutual funds depending upon the term and the risk profile of the goal.
All said and done, market highs and market lows will come and go. The volatility shouldn’t bother long-term investors. You should keep an eye on your goals and invest systematically.