Investors come in different shapes and sizes. They have different investment horizons and risk appetites that determine their investment decisions. They are broadly categorised into conservative, moderate and aggressive. Some investors keep adjusting their risk appetite depending on the prevailing market condition. When the market falls precipitously, the way it did in the first quarter of FY23, these investors become aggressive.
Nonetheless, when the market is trading at a lofty valuation, they become conservative. These types of investors are ‘opportunists’. There is nothing wrong with such investors.
However, identifying the top and bottom of the market is extremely difficult and even the most seasoned investors cannot vouch for it on a consistent basis. Hence, one of the best strategies is to invest in a diversified portfolio. Diversification is the key to reducing investment risk.
Defining Diversification Diversification in its simplest meaning implies investing in stocks or asset classes that do not move in tandem. Through the process of diversification you mitigate the portfolio risk by having exposure to a variety of different assets or stocks, which means not putting all your eggs in one basket, as the old cliché goes. The main purpose of diversification is to lessen the overall volatility of your investments. Where one may go bad, others go well, which means helping to even out the performance over the long term. In the current market situation, it's a good time to diversify your portfolio.
Denne historien er fra January 02, 2023-utgaven av Dalal Street Investment Journal.
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Denne historien er fra January 02, 2023-utgaven av Dalal Street Investment Journal.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
