Volatility and uncertainty have returned once again with the second COVID wave gripping the country and throwing life out of gear. It’s during these testing times that you need to adopt a diligent approach and manoeuvre your portfolio skilfully to ride choppy waters.
Equally important to keep fear and greed at bay as they could lead to poor decision-making, impinging critical life goals in the process.
So, what approach should you adopt in shielding your portfolio and preserving the gains made painstakingly over the years? Let’s find out.
Focus on Assets With Historically Successful in Markets
In times of economic uncertainty, common sense says to invest in something dependable. Stable markets are worth consideration for any curious investor. While it may not yield the quick return of a more risky investment, it is worth exploring if history is any guide.
Time and again, Indian markets have proven their resilience. It has emerged stronger after every crisis, and it’s not going to be any different this time too. March 2020 seems to be a distant dream given how quickly markets rebounded in subsequent months.
If you are looking to go international, you can bank on the US markets and participate in the growth story of FAANG (Facebook, Amazon, Apple, Netflix, and Google).
At the same time, it’s essential to bank on established performers rather than chasing new offerings without any track record. Irrespective of whether you invest in stocks or mutual funds, go for proven players rather than rookies even if valuations seem stretched.
Diversify Your Portfolio with Liquid Assets
We are living in troubled times where liquidity is essential. Analyse your portfolio and ensure you have invested a sizable portion of your money in assets that you can quickly convert into cash. Easy access to investments matters in these times.
While cash is the most liquid asset, you can give your portfolio much-needed liquidity by investing in assets such as mutual funds and bank fixed deposits. When needed, you can easily liquidate them to meet your current needs and sail through.
Protect Your Retirement Funds
Often when people think of the long term, retirement is not in their scheme of things. Even if it is, long-term retirement investments generally focus on real estate or a house, which are highly non-liquid.
Given that the days of pre-defined pension benefits are limited, it’s essential to invest and protect your retirement funds to ensure you live your golden years on your terms, stress-free.
Investments in the National Pension System (NPS), Public Provident Fund (PPF), Voluntary Provident Fund (VPF), etc., can help you garner a decent retirement corpus.
However, note that you need to stay invested for the long haul to make real gains from them. Also, don’t divert your retirement funds for other needs, and this can result in a shortfall and prevent compounding from weaving its magic.
In Conclusion
The current times are no different from what we witnessed last year. Avoid knee-jerk reactions and remain committed to your investments as this too shall pass. Stay safe, be vigilant.
Disclaimer: The views and investment tips expressed by the investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.