What is volatility and why investor’s dilemma is on rise ?
Volatility simply means confusion or uncertainty that is directly proportional to the fluctuations in market. Investors tend to avoid many advantages of their investment by making volatility a superior or a dominating trait in their speculations.
“Fear is something which should be overcome before it takes control of your mind and decisions”.
You must have heard this over and over but when it comes to implementation of the same, this might seem impractical with mutual fund industry. I’ve seen many people not investing even when they have surplus money as savings. They prefer much of their capital in fixed deposits or savings account. That’s just one case, Many people do not even prefer saving for a long period of time.
Market never works this way, you can never have a sure shot idea and you can never think short term if you want to yield good returns.
Below are some tips on how you can avoid such volatility and bring that certainty and stability to the investments.
Stick to the market – Whenever a fund’s price rise or decrease don’t get agitated else stay invested and don’t let yourself get affected with the short term fluctuations. Market never stays the same. Try and keep the flow by staying in the fund. One day might be not good but the other day you never know what is going to happen next. Delay might come along the way but having patience is the key.
Have a cap on Investments – One common mistake that people often attempt to do is not having a clear view of the investment. The best way to do this is to get a balanced portfolio. To keep it for long term everything needs to be in a systematic way. Maintaining diversification in portfolio is important to achieve the goal.
Don’t get influenced – Best way to get the grip in your hand is not to get influenced by each and every other person you meet. Every person you meet might not know your future financial requirement, Your risk tolerance or any other investment plans for that matter. It’s good to take advice but it’s not necessary for every advice to get implemented. Equity funds are considered as the most volatile sector to invest and this is the reason why other person seems to be afraid of the equity market. Though they give higher returns, Only 2 out of 10 people opt for it.
Know your risk tolerance – There are possibilities that when you started investing, The market was stable and on rise, with which you thought your risk tolerance is high but as concluded by many experts, market is not always the same. This is why expert says not to time the market. Risk tolerance should be judged on the basis of your own long term mindset, Always at an individual level.
Keep that certainty in decisions – Simple way of not getting trapped in the volatility web is to be certain of the investment decisions on the first place. Those uncertainties might lead you in trouble. With the aim of getting more returns, People invest in multiple funds which might be a bad decision in a long run. Keeping an eye on the fund performance in past years will be helpful in this case.
All the above tips will help you in choosing the best fund to suit your personal future needs & development. Getting a clear vision is equally important. Investors need to keep these things in mind before have a sure idea of there investment.
Disclaimer : Mutual fund investments are subject to market risks. Please read the offer documents carefully before investing.