At all times, financiers must align the investment decisions to their financial goals and risk appetite. But in the current economic situation brought up by COVID-19 pandemic, you need to be more careful than usual. The International Monetary Fund (IMF) report says that further intensification of this crisis could impact global financial stability. Clearly, the world outside is nothing like anyone has experienced before.
As you continue to live a secluded life in your home while the COVID-19 play havoc with global markets, you might be feeling anxious about investing through mutual funds in India. A lot of investors are asking the same question about mutual funds in India and looking for a reliable financial advisor like FinEdge. Let us help you reach the right answer through this analogy –
Suppose you have invested in a restaurant, hotel, or a gym, the business from which is entirely off these days. You neither know when the establishment will reopen nor when things become normal again. In such a situation, closing your business is not a good idea. Instead, it is good to wait for the dust to settle over time and then look at the market conditions to redefine investing through mutual funds in India.
With so much volatility in the market, here are a few investment-related tips you can follow:
Do Not Ignore the Power of Diversification
In investment terms, diversification helps protect your investment portfolio against the impact of market volatility. If your portfolio is adequately diversified, that is, you have invested across different asset classes, the effect of losses can be minimized. Better returns from another asset class will back low returns from an underperforming asset class.
For example, in the current situation, equity investments may bring negative returns. But Gold and FD investments can help limit the overall loss. So, if you have invested only through mutual funds in India, make sure you diversify the portfolio by including other investment avenues into the list.
Focus on Investing Money for the Long Term
Investing through mutual funds in India for the long term is often considered a surefire way to build wealth. It is because, with a long-term view, you can look at the market crash during COVID times as an opportunity to invest right. For instance, if you have chosen mutual fund Systematic Investment Plan (SIP), the long-term investment perspective will give the benefit of rupee cost averaging.
In general, the market revives in the long term, but the shape of recovery may differ from time to time. You, as a long-term investor, are likely to receive better returns from your investments compared to those having a short-term plan.
Keep an Eye on Your Financial Goals
In general, all investors must invest money through mutual funds in India based on their goals. But when you witness high volatility in the market, any investment decision you make must be strictly in sync with your goals. You might have heard of people redeeming high-risk investments and put the funds into safer instruments. This is one way to minimize risk. But you must know if it would work well in your case before making any decision.
It is best not to deviate from achieving the financial goals, building a corpus, or planning for retirement, by making wrong decisions. Instead, seek help from professionals about your investments.
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Steer Clear with the Help of Financial Advisors
Panic-stricken financial decisions can cause unnecessary losses at times. You can safeguard your investments by staying informed about what to do. If you are not sure about devising or following an investment plan on your own, you can consult renowned financial advisors like FinEdge. They will help you lay down the path for quicker recovery of your portfolio when the market restores to a better form.