The primary aim of investing is to grow our money and make it work harder for us. That means firstly focusing on avoiding negative returns, keeping funds safe and only then planning for gain and alpha returns. Diversification is what helps to grow money with a lower risk of losing. A portfolio that is well-constructed not only ensures participation during market rallies, but also helps in downside protection. A key step to building such a portfolio is to diversify across asset classes. It doesn’t just mean holding on to too many schemes. The article looks at how we can go about diversifying our investments meaningfully.
Managing stock market volatility is challenging. Especially when it tanks due to unforeseen situations. What you need to ask is “Are we sticking to the plan? Has it been prepared by a competent financial planner? Yes, money invested in equities could see negative returns for some time due to the volatility as markets correct at a very rapid speed due to panic selling in a few trading sessions giving no time to exit. What are the safety measures that we could undertake to prevent capital erosion?
