9 Tips for Investors when Stock Markets hit all-time high

Nutan Gupta

08 Jun 2017

New Page 1

The market moves are not independent but dependent on global economic and political scenarios. A political move on the national front can create ripples on the economic front. The Modi Government has ushered in an era of stock market boom. With the stock markets hovering around at an all-time high, should investors and daily traders be wary of a robust market, as markets have the tendency to surpass all predictions.

While the stock market and the political decisions of the Centre are the talk of the town, retailers and traders are making spectacular efforts to throw all excel based valuations out of the window. Investors are lapping up on subscriptions, anything and everything that seems to be showing positive growth.

On the other hand there are some investors cautious of the timings of the market given the global scenario. Are the bulls and bears fighting the fight too fast or they are overheated and will calm down soon?

Some mutual fund managers argue that these are the times to get a new set of investors to jump in while others believe that price correction might be the right time to sell but it is not the right opportunity to invest in anything new. Whatever the opinion of the experts, none of them can prove anything in a meltdown scenario like this.

Simply speaking, stock prices shoot up when companies grow and their growth has a direct impact on the market. Attaining heights in the stock market is a natural event as stocks are expected to grow beyond a period.

Well in a situation like this investors turn to financial experts for tips. We give you 9 tips to help you calm down and take an informed decision about investments.# Tackle your Fears

Investors tend to be of two kinds, one who are easily gullible and fall prey to the fear of missing out and others are those who have a risk appetite and fearless of the ups and downs of the stock markets. The former investors in a situation of market hitting a high are easy suspects of smart marketers who lure them into investing in new things with the fear of missing out on a once in a life-time opportunity. Therefore the investor ends up buying something that he did not need or was not of any need to him at the present moment.

*Beware! You might either end up buying the best stocks in your fear of losing out or end up with something you never wanted to waste your money on.

#Introspect Your Portfolio and Base Your Decision on Retrospect

When the market hits a high, investors are flooded with offers to bring about a change in the structure of their investment portfolio. Don’t push for any investment in your portfolio unnecessarily. However, if you are missing out on a financial component, this could be the right time to add it to your portfolio. Whatever addition and subtraction that you do should be based on your risk appetite and time horizon. Any allocation of assets that has gone way beyond, now is the right time to rebalance your portfolio.

*Don’t jump in at once. Enquire, research and then go for restructuring of your portfolio.

#NO investment need means NO investment need

Investors are susceptible to the lure of profits and are easily made to make an investment which is definitely not needed for their portfolio. Stocks are profitable but they are not the easy way to fulfill all investment and financial goals. If you lack the appetite for risk or are comfortable in achieving your financial goals in the long run with safe bets, then be it.

*A NO is good at times and if you are at the age of retiring than NO definitely means NO in the financial market.

#Cash Reserves

Liquid money is desirable for achieving short-term goals. Investors who have saved their money for a goal over a period and find a decent return should collect the money out and invest it in a safe asset. For short term goals, capital preservation should be a bigger priority than capital growth.

#Numbers Do Lie

Stock market is unreliable and unpredictable. Do not base any of your investment decision on the past returns of some assets. Every asset in a good market appears to be a piece of gold. However, that’s not the case. Do your research; scrutinize the minutest details of the asset before investing your money in a particular scheme.

#The Question "WHY" Never Fails

Why did you this? Why did you do that? Find answers to all your financial decisions to be sure of the investment you are making as well as you have made. Any unsatisfactory reply to any of your why should make you reconsider the investment you are making or have made.

#Know your Portfolio

Get a quick run through done of your portfolio with the positive and the negatives both being highlighted. Take the information in your stride to mark out your future plans in a better way.

#Part Investment is Better

Investing a large sum in a volatile market is not feasible. Hence, invest it in instalments. Part investments will allow you to buy and sell during price corrections and get great deals. The GST set to be rolled out by the government is sure to create temporary fluctuations in the market and create a situation of correction. This would be a good time for selling and buying and if investors are unsure of their ability to stagger investments, they should invest in products that carry less risk.

#Absolute Numbers can be Deceiving

Investors should avoid the mistake of going by absolute numbers as projected by Nifty, Sensex or any stock for that matter. The value of rupee has depreciated over the years and an x amount 10 years back would not have the same purchasing power at present. Stocks should be valued and compared with their earning potential.

The high and lows of stock markets are here to stay. These tips will guide you through the times of turmoil and help you take the right decision. Get ready to roll!

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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9 Tips for Investors when Stock Markets hit all-time high

Nutan Gupta

08 Jun 2017

New Page 1

The market moves are not independent but dependent on global economic and political scenarios. A political move on the national front can create ripples on the economic front. The Modi Government has ushered in an era of stock market boom. With the stock markets hovering around at an all-time high, should investors and daily traders be wary of a robust market, as markets have the tendency to surpass all predictions.

While the stock market and the political decisions of the Centre are the talk of the town, retailers and traders are making spectacular efforts to throw all excel based valuations out of the window. Investors are lapping up on subscriptions, anything and everything that seems to be showing positive growth.

On the other hand there are some investors cautious of the timings of the market given the global scenario. Are the bulls and bears fighting the fight too fast or they are overheated and will calm down soon?

Some mutual fund managers argue that these are the times to get a new set of investors to jump in while others believe that price correction might be the right time to sell but it is not the right opportunity to invest in anything new. Whatever the opinion of the experts, none of them can prove anything in a meltdown scenario like this.

Simply speaking, stock prices shoot up when companies grow and their growth has a direct impact on the market. Attaining heights in the stock market is a natural event as stocks are expected to grow beyond a period.

Well in a situation like this investors turn to financial experts for tips. We give you 9 tips to help you calm down and take an informed decision about investments.# Tackle your Fears

Investors tend to be of two kinds, one who are easily gullible and fall prey to the fear of missing out and others are those who have a risk appetite and fearless of the ups and downs of the stock markets. The former investors in a situation of market hitting a high are easy suspects of smart marketers who lure them into investing in new things with the fear of missing out on a once in a life-time opportunity. Therefore the investor ends up buying something that he did not need or was not of any need to him at the present moment.

*Beware! You might either end up buying the best stocks in your fear of losing out or end up with something you never wanted to waste your money on.

#Introspect Your Portfolio and Base Your Decision on Retrospect

When the market hits a high, investors are flooded with offers to bring about a change in the structure of their investment portfolio. Don’t push for any investment in your portfolio unnecessarily. However, if you are missing out on a financial component, this could be the right time to add it to your portfolio. Whatever addition and subtraction that you do should be based on your risk appetite and time horizon. Any allocation of assets that has gone way beyond, now is the right time to rebalance your portfolio.

*Don’t jump in at once. Enquire, research and then go for restructuring of your portfolio.

#NO investment need means NO investment need

Investors are susceptible to the lure of profits and are easily made to make an investment which is definitely not needed for their portfolio. Stocks are profitable but they are not the easy way to fulfill all investment and financial goals. If you lack the appetite for risk or are comfortable in achieving your financial goals in the long run with safe bets, then be it.

*A NO is good at times and if you are at the age of retiring than NO definitely means NO in the financial market.

#Cash Reserves

Liquid money is desirable for achieving short-term goals. Investors who have saved their money for a goal over a period and find a decent return should collect the money out and invest it in a safe asset. For short term goals, capital preservation should be a bigger priority than capital growth.

#Numbers Do Lie

Stock market is unreliable and unpredictable. Do not base any of your investment decision on the past returns of some assets. Every asset in a good market appears to be a piece of gold. However, that’s not the case. Do your research; scrutinize the minutest details of the asset before investing your money in a particular scheme.

#The Question "WHY" Never Fails

Why did you this? Why did you do that? Find answers to all your financial decisions to be sure of the investment you are making as well as you have made. Any unsatisfactory reply to any of your why should make you reconsider the investment you are making or have made.

#Know your Portfolio

Get a quick run through done of your portfolio with the positive and the negatives both being highlighted. Take the information in your stride to mark out your future plans in a better way.

#Part Investment is Better

Investing a large sum in a volatile market is not feasible. Hence, invest it in instalments. Part investments will allow you to buy and sell during price corrections and get great deals. The GST set to be rolled out by the government is sure to create temporary fluctuations in the market and create a situation of correction. This would be a good time for selling and buying and if investors are unsure of their ability to stagger investments, they should invest in products that carry less risk.

#Absolute Numbers can be Deceiving

Investors should avoid the mistake of going by absolute numbers as projected by Nifty, Sensex or any stock for that matter. The value of rupee has depreciated over the years and an x amount 10 years back would not have the same purchasing power at present. Stocks should be valued and compared with their earning potential.

The high and lows of stock markets are here to stay. These tips will guide you through the times of turmoil and help you take the right decision. Get ready to roll!

Have Referral Code?