Practice Asset Allocation For Optimal Returns

The bullish post-pandemic environment prompted many first-time investors to dip their toes in the equity landscape.

Rohit Kumar Sonthalia Director SFIC Fiscal services Pvt Ltd

Buoyed by surplus liquidity, low-interest rates, and strong optimism, many millennial and Gen Z investors entered the stock market and invested their hard-earned savings in the quest for high returns. For example, 25-year-old IT engineer Prateek Shah with four years of work experience and modest savings was among this new cadre of investors. He had saved up about ₹3 lakhs during the course of his career and wanted to try his hand at investing. His was not a solitary case as most of his friends and colleagues also started investing heavily in the bull market.

Come 2022 and the market began losing steam. Everything from geopolitical tension to rising crude prices and inflation weighed on sentiment, pushing the market into bear territory. Prateek’s friends, who had invested their entire corpus in equities, found themselves facing tremendous notional losses. Some of them sold their stocks and bowed out with real losses while others are still holding on to their shares in the hope of a reversal of fortune. Prateek, however, did not suffer as heavily because he decided to follow the often said statement: never place all your eggs in one basket.